On April 29, the Supreme Court issued its opinion in Advocate Christ Medical Center et al., v. Kennedy, affirming a lower court ruling that upheld The Department of Health and Human Services' (HHS) interpretation of a Medicare statutory formula governing Medicare payments for hospitals that serve a disproportionate share of low-income patients. While a decision in favor of the hospital plaintiffs could have had the effect of expanding the number of Disproportionate Share Hospitals (DSH)—and therefore the number of hospitals eligible to receive discounts under the 340B drug discount program—the Court's ruling in favor of HHS' more narrow interpretation of eligible DSH providers retains the status quo.
At issue in this case is exactly which patients are "entitled to [supplementary security income (SSI)] benefits" under the relevant DSH statutory formula. HHS has interpreted this phrase as referring only to patients who are actually "entitled to receive SSI benefits during the month" in which they were hospitalized. Because HHS' interpretation results in a lower number of relevant patient days under the DSH formula (and thus a lower Disproportionate Patient Percentage (DPP) and subsequent DSH payment), a group of more than 200 hospitals sued the department, arguing HHS had underpaid them for fiscal years 2006 to 2009 because the relevant phrase should be read more broadly to encompass all individuals enrolled in the SSI system at the time of hospitalization, even if they did not receive an SSI payment during the month in question (resulting in a higher DPP and subsequent DSH payment for the hospitals).
All lower courts to consider this issue had upheld HHS' narrower interpretation, and the Supreme Court's decision now affirms these rulings. According to the Court, the phrase "entitled to SSI benefits" should be read as only including individuals who (because of their income and resources) were actually eligible for SSI cash benefits during the relevant month (as opposed to individuals who had been enrolled in the SSI program but were not eligible for the particular month in question).
Had the Court decided in favor of the hospitals in this case and adopted a broader interpretation of the Medicare statute, more hospitals may have newly qualified as 340B covered entities, and existing 340B covered entity hospitals close to the DPP threshold would have benefitted from an extra cushion to maintain their eligibility.
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