Advocate Christ Medical Center v. Kennedy
Case Overview
A group of hospitals challenged the Department of Health and Human Services' method for calculating the Medicare disproportionate share hospital adjustment, which provides supplemental payments to hospitals serving high proportions of low-income patients. The Supreme Court held, applying independent statutory interpretation post-Loper Bright, that the Medicare fraction of the DSH formula counts patient days based on enrollment in Medicare Part A rather than whether the specific admission was covered, increasing DSH payments for safety-net hospitals.
The Facts
Medicare pays a DSH adjustment based on the proportion of patient days for low-income Medicare and Medicaid patients. The hospitals argued HHS was incorrectly excluding days when a Medicare-enrolled patient's particular admission was not covered by Medicare, such as because they had exhausted their benefit period. HHS's exclusion reduced DSH payments to safety-net hospitals. The dispute turned on whether being enrolled in Medicare Part A constitutes being entitled to benefits for a given admission.
The Application
The Court applied the statutory interpretation rule governing the DSH formula to the hospitals' challenge of HHS's counting methodology. Specifically, the Court had to interpret whether 'entitled to benefits' in 42 U.S.C. § 1395ww(d)(5)(F) refers to Medicare Part A enrollment status or only to admissions actually covered under the program on a given day. Exercising post-Loper Bright independent judgment, the Court examined the statutory term's ordinary meaning in the context of the DSH formula's purpose—measuring the proportion of low-income patients a hospital serves—rather than deferring to the agency's narrower reading. The Court's application of this statutory interpretation rule determined whether patient days for Part A enrollees whose specific admissions lacked coverage would be counted in the Medicare fraction, directly affecting DSH reimbursement for safety-net hospitals nationwide.
The Conclusion
**Advocate Christ Medical Center resolves a long-running dispute about Medicare DSH calculation methodology with significant financial consequences for safety-net hospitals nationwide.** The ruling, rendered without Chevron deference, determines whether enrollment-based or coverage-based counting governs the Medicare fraction, directly affecting reimbursement levels for hospitals treating disproportionate shares of low-income patients, including many urban and rural facilities that operate on thin margins.
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