Becerra v. Empire Health Foundation, For Valley Hospital Medical Center

Background

This case pits the Department of Health and Human Services (the federal agency that runs Medicare) against Empire Health Foundation, which represents a hospital. Medicare pays hospitals fixed rates and adds extra money (a DSH adjustment) for hospitals that treat many low-income patients. The DSH formula uses two percentages: a Medicare fraction for low-income Medicare patients and a Medicaid fraction for low-income non‑Medicare patients. The dispute asked whether people who qualify for Medicare but whose care is not paid by Medicare on a given day still count as Medicare patient days.

Reasoning

A 2004 HHS regulation said such people count. The Ninth Circuit disagreed, reading “entitled to benefits” to mean actually receiving Medicare payment for that day. The Supreme Court reversed. The majority held that “entitled to [Part A] benefits” in the Medicare fraction means those who qualify for the program (for example, by turning 65 or meeting disability rules). The parenthetical “(for such days)” limits counting to the days after a person qualifies, not to days on which Medicare actually paid. The Court also said this reading fits the statute’s two-part structure, which separately measures low-income Medicare and non‑Medicare patients.

Real world impact

The ruling tells HHS to count Medicare‑eligible patient days when computing the Medicare fraction, even if Medicare did not pay that day. The opinion notes that for many hospitals this approach has tended to lower DSH payments, and that the combined percentage (often measured against a 15% threshold) determines whether a hospital gets extra funds. The case was returned to lower court for further proceedings consistent with the decision.

Dissents or concurrances

A four-justice dissent argued the statute asks whether Medicare was obligated to pay for particular days, not just whether a person qualifies, and noted HHS once interpreted the rule differently before 2004.