This is a big legal week for hospitals and health systems as the U.S. Supreme Court heard not one, but TWO different oral arguments related to federal government payments to hospitals and health systems. In both cases, the Supreme Court will hear complaints from hospital advocates about the way that the Department of Health and Human Services (HHS), through the Centers for Medicare and Medicaid Institutes (CMS), interpreted a federal regulation setting reimbursement rates.
In the first case, Becerra v. Empire Health Foundation, health systems argue that HHS is incorrectly interpreting a formula used in the Medicare disproportionate share hospital (DSH) program which reimburses hospitals for services provided to low-income patients. In the second case, American Hospital Association v. Becerra, some hospitals take issue with cuts in reimbursement for drugs distributed through outpatient departments.
In addition to the hospital payment impact, both cases may provide the Supreme Court with an opportunity to reconsider how much deference federal courts should give to federal agencies when they interpret statutes. The Chevron doctrine, first established in Chevron U.S.A. Inc. v. Natural Resources Defense Council a 1984 Supreme Court decision, provides a process for federal agencies to follow when the intent of a statute may not be clear. Generally, under Chevron, federal courts will give great deference to an agency’s interpretation. Some Supreme Court justices have been critical of the Chevron doctrine and this week’s hospital cases may provide an opportunity for the Supreme Court to revise the standard.
While the Chevron issue may have national impact, the substantive outcomes of these cases will provide guidance and direction for a broad range of health care providers and the federal agencies that administer federal health care programs such as Medicare and Medicaid.
More information and background about each case follows:
DSH Case - Becerra v. Empire Health Foundation
340B Case - American Hospital Association v. Becerra