Last week, the D.C. Circuit held that Medicare beneficiaries “entitled to supplemental security income [(SSI)] benefits under Title XVI of the Social Security Act” means only those patients receiving cash payments for purposes of the Medicare disproportionate share hospital (DSH) calculation. The DSH adjustment provides additional compensation to hospitals serving a high percentage of low-income patients. The D.C. Circuit Court’s ruling affirms the D.C. District Court’s grant of summary judgment to HHS, which was decided 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 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.
HHS interpreted the phrase “entitled to SSI benefits” to denote only those patients who are determined to be entitled to the cash payment during the month they were hospitalized as inpatients. The hospitals, on the other hand, 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 during the month in which they were hospitalized. The hospitals posed two key arguments among others—none of which the court found availing.
First, the hospitals argued that SSI benefits under Title XVI included not only cash payments but also the Medicare Part D subsidy and vocational rehabilitation services. The question turned on what counted as “income” benefits under Title XVI. The D.C. Circuit sided with HHS, finding that “at every turn,” Title XVI “is about cash payments.”
Second, the hospitals argued that the Supreme Court’s decision in Empire v. Becerra compelled their construction of the phrase. Empire held that the phrase “entitled to benefits under part A,” as used to determine the Medicare fraction, covers patients who meet “the threshold requirements for Part A benefits,”, even if Medicare does not pay for specific treatments because of coverage limitations, alternative insurance, or the like. The hospitals believed that if the phrase “entitled to benefits under part A” covered patients who meet basic eligibility requirements without regard to specific payment decisions, then so too must the adjacent phrase “entitled to SSI benefits.” The Circuit Court found that the hospitals failed to adequately account for two key distinctions between the Part A and SSI schemes: (1) Part A benefits extend beyond payment for specific services at specific times, for which there is no comparable parallel in the SSI context; and (2) age or chronic disability makes a person eligible for Part A benefits without an application and individuals rarely lose eligibility over time, unlike the SSI program which requires an application and where enrollees “routinely ping-pong in and out of eligibility depending on fluctuations in their income or wealth from one month to another.”
Lastly, the hospitals sought an order compelling HHS to provide them with payment codes assigned by SSA to their respective patients under the Mandamus Act, 28 U.S.C. § 1361—the hospitals wanted this data to verify or challenge CMS’s calculation of their respective Medicare fractions. The hospitals had already received data that identifies SSI eligible matched to Part A enrolled individuals which HHS uses to calculate the numerator of the Medicare fraction. In this case, the hospitals sought the specific codes used by SSA to track why those individuals did or did not qualify for the monthly cash payment. The Circuit Court however, affirmed the denial of this request, stating that because the SSA did not provide HHS with the specific codes assigned to individual patients, HHS could not give hospitals data that it never received from SSA in the first place.
Despite this significant setback in the D.C. Circuit, hospitals should consider continuing to protect their appeal rights on this issue. The same issue was presented as an argument in the alternative in Empire, i.e., the case that went to the Supreme Court. While the Supreme Court did not address the alternative argument – it merely upheld CMS’s broad interpretation of “entitled to benefits under Part A”—that argument is now back before the district court upon remand. Not only is the D.C. Circuit’s opinion not binding in the Ninth Circuit, but Empire can emphasize the several categories of patients that CMS excludes from the SSI fraction for reasons independent of income, including several categories of patients that the D.C. Circuit refused to consider because it deemed the argument regarding those patients waived. A favorable decision in Empire would benefit all hospitals that have recourse to the Ninth Circuit – the adverse D.C. Circuit decision notwithstanding--and would also create a circuit split that could ultimately be decided by the Supreme Court itself.
The case is Advocate Christ et al. v. Becerra. The D.C. Circuit decision is available here and the D.C. District Court decision is available here.
