Advocate Christ Medical Center v. Kennedy, 605 U.S. ___ (2025) [2025 WL 1224342]

Advocate Christ Medical Center v. Kennedy, 605 U.S. ___ (2025) [2025 WL 1224342]

In calculating the Medicare fraction of the disproportionate share hospital adjustment, an individual is “entitled to supplementary security income benefits” when she is eligible to receive an SSI cash payment during the month of her hospitalization.

The government reimburses hospitals that provide inpatient care to Medicare recipients. Hospitals that treat a disproportionate share of low-income patients typically have higher Medicare costs, and are reimbursed at a higher rate as determined by a “disproportionate-share” formula. The formula is the sum of two fractions: the Medicare fraction (the proportion of a hospital’s Medicare patients with low incomes) and the Medicaid fraction (the proportion of a hospital’s low-income patients who are eligible for Medicaid, but not for Medicare). The larger the fraction, the more funding the hospital receives.

A group of hospitals challenged how the Department of Health and Human Services (HHS) calculates the numerator of the Medicare fraction, which represents the “number of patient days attributable to Medicare patients who were ‘entitled to benefits under [Medicare] part A’ and were ‘entitled to supplementary security income [(SSI)] benefits . . . under subchapter XVI.’ ” HHS interpreted the phrase entitled to SSI benefits to refer to patients who are entitled to receive SSI benefits during the month they were hospitalized. The hospitals disagreed, insisting that the phrase encompasses all patients enrolled in the SSI system at the time of their hospitalizations, regardless whether they were entitled to an SSI payment that month. The hospitals argued HHS underfunded them by misinterpreting the Medicare fraction.  The district court rejected the hospitals’ claims and granted summary judgment to HHS.  The D.C. Circuit affirmed, and the Supreme Court granted a writ of certiorari to decide what it means to be “entitled” to SSI benefits in this context.

The Supreme Court affirmed the D.C. Circuit decision: a person is “entitled” to SSI benefits when she is eligible to receive a cash payment during the month of her hospitalization. The Court distinguished Becerra v. Empire Health Foundation, 597 U.S. 424 (2022), which held that the phrase “entitled to benefits under [Medicare] Part A” means qualifying for them, whether or not a payment was actually received. The majority noted that Medicare Part A’s “entitlement is automatic and ongoing,” while “the SSI [monthly cash] benefit is neither: Recipients must apply for and be deemed eligible for benefits, and recipients can (and do) fluctuate in and out of eligibility depending on their income and resources from one month to the next.” Finally, the majority explained that Congress’s choice of formula, though imperfect, balances multiple competing interests, including administrability and efficiency.

Justice Jackson dissented, joined by Justice Sotomayor. The dissent interpreted “entitled” to SSI benefits to refer to all patients enrolled in SSI at the time of hospitalization, reasoning that “the true ‘benefit’ of SSI” is the assurance of having an annual income above the federal minimum guaranteed to all enrollees, regardless whether payments come from salary or the Government.

The bulletin describing this appellate decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson, Peder K. Batalden, and Lacey Estudillo at the appellate firm Horvitz & Levy LLP, and is republished with permission.

For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800.

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