Supreme Court Decision Bodes Well for Hospitals Appealing DSH SSI Issue

Posted on July 1, 2022 in HEALTH LAW NEWS

Published by: HALL RENDER

In Becerra v. Empire Health Foundation., the Supreme Court upheld CMS’s decision to include Medicare exhaust and secondary payor days in the Medicare Fraction of the Disproportionate Share Hospital (“DSH”) statute. Although a loss for the hospitals in Empire, the ruling may support hospitals seeking to add SSI days to the numerator of the Medicare Fraction in ongoing and future appeals.[1]


The DSH statute instructs CMS to include in the Medicare Fraction’s denominator all patients “entitled to benefits” under Medicare Part A. The question here was whether Medicare patients whose hospital stay was not actually paid by Medicare were still “entitled to benefits.” Before 2004, CMS only counted Medicare “covered” days. But in 2004, CMS reversed course, eliminated the word “covered” from its regulation, and shared its intent to include all Medicare patients in the Medicare Fraction—even if Part A did not cover their hospital stay. Empire challenged CMS and successfully argued before the Ninth Circuit that “entitled to benefits” meant an absolute right to payment, and not mere eligibility for Medicare. The D.C. and Sixth Circuits previously rejected this argument.

In its 5-4 decision issued June 24, 2022, the Court reversed the Ninth Circuit, finding that “entitled to benefits” is “a term of art meaning qualifying for benefits” used throughout the Medicare Act to refer to all Medicare beneficiaries, regardless of payment. Similarly, the Medicaid Act consistently refers to patients “eligible for” assistance. The difference in language thus reflected Congress’s adoption of the terms already used in each Act and was not an intentional restriction on which patient days were to be included in the Medicare Fraction.

Under the Empire holding, the Medicare Fraction should include Medicare Exhaust and Secondary Payor Days, even if Part A did not pay Medicare benefits for the beneficiary’s stay. By the same logic, the Medicare Fraction numerator should also include SSI eligible days even if the SSI beneficiary is not receiving their SSI payment while in the hospital. However, CMS interprets SSI entitlement differently and requires patient receipt of SSI payments while hospitalized. Thus, CMS counts only three (3) SSI status codes out of 77 potential codes, thereby excluding numerous SSI eligible days from the Medicare Fraction numerator. DSH-eligible hospitals should preserve their appeal rights on this issue which seeks to have CMS include additional SSI status codes in the DSH calculation.

Practical Takeaways

  • The Supreme Court upheld CMS’s decision to include Medicare exhaust and secondary payor days in the Medicare Fraction of the DSH calculation.
  • The Supreme Court reasoned that the receipt of payment should not be the determining factor for inclusion in the Medicare Fraction.
  • This decision lends support to the contention that all SSI Eligible Days should be included in the numerator of the Medicare Fraction.
  • Hospitals should consider preserving appeal rights to include additional SSI days in their Medicare Fraction numerator.

Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer an individual’s questions that may constitute legal advice.