12 August, 2024

U.S. Supreme Court to Hear Landmark Medicare Funding Case

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In: Client Alert

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Washington, D.C. – The U.S. Supreme Court has agreed to hear a pivotal lawsuit brought by more than 200 hospitals across 32 states that serve low-income populations, challenging the federal government over $1.5 billion in Medicare funding discrepancies annually. This critical case seeks to overturn a decision by the U.S. Court of Appeals for the D.C. Circuit, which upheld the current funding determination method employed by the U.S. Department of Health and Human Services (HHS).

Impact on Rural Hospitals and Healthcare Accessibility

  • The hospitals contend that the current underfunding methodology has severely impacted their operations, contributing to the closure of rural hospitals and exacerbating healthcare accessibility issues for the neediest patients.
  • In their petition, the hospitals state, "The neediest patients pay the price, traveling farther and waiting longer for care, if they can obtain it at all."

Supreme Court's Decision to Hear the Case

  • In accordance with its standard procedure, the Supreme Court did not provide a rationale for its decision to take up the case.
  • Hyland Hunt of Deutsch Hunt, legal counsel for the hospitals, expressed optimism, saying, "We look forward to presenting our case to the court."
  • A representative for HHS declined to comment on the pending litigation.

Background on the 2017 Lawsuit

  • The lawsuit, originally filed in 2017, addresses the calculation of disproportionate share hospital (DSH) funding.
  • Under federal law, DSH funding provides additional Medicare reimbursement to hospitals serving a high volume of low-income patients.
  • A key factor in determining DSH funding is the proportion of Medicare patients who also qualify for supplemental security income (SSI), a federal assistance program.

Discrepancy in Counting SSI-Eligible Patients

  • The hospitals argue that HHS's current practice of only counting patients who actively receive SSI benefits during their hospital stay, rather than all eligible patients, contravenes the law.
  • SSI benefits are assessed monthly and can fluctuate, potentially resulting in zero benefits for a particular month despite ongoing eligibility.

Consistency with Previous Supreme Court Ruling

  • This discrepancy, the hospitals claim, is inconsistent with HHS's practice—upheld by the Supreme Court in 2022—of counting all Medicare-eligible patients for DSH calculations, regardless of Medicare's payment status for hospital stays.
  • The hospitals argue, "Left standing, the agency's cake-and-eat-it-too position threatens the financial viability of safety net hospitals and impairs their ability to treat low-income elderly and disabled patients and serve their broader communities.

HHS's Response to the Lawsuit

  • In its response brief, HHS contends that Medicare eligibility, which is permanent for senior citizens, fundamentally differs from the fluctuating nature of SSI benefits, which reflect patients' monthly financial need.

What This Means for Defense Law

  • The Supreme Court's decision to hear this case highlights the critical role of regulatory compliance in healthcare law.
  • It underscores the need to stay informed about evolving standards and legal strategies in defending against regulatory disputes.
  • The case could influence how federal funding and administrative decisions are interpreted, impacting future litigation. Defense attorneys will need to adapt their strategies to address these changes effectively.
  • This is a key opportunity to apply skills in regulatory defense and healthcare law, shaping approaches to similar funding and compliance issues.

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