Becerra v. Empire Health Foundation, For Valley Hospital Medical Center
597 U.S. 424, 213 L. Ed. 2d 685 (2022)
Rule of Law:
For the purpose of calculating the Medicare fraction of the Disproportionate Share Hospital (DSH) adjustment, a patient is considered 'entitled to benefits' under Medicare Part A if they meet the program's statutory criteria, such as age or disability, regardless of whether Medicare actually pays for their hospital treatment on a specific day.
Facts:
- The Medicare program provides a Disproportionate Share Hospital (DSH) adjustment to pay higher reimbursement rates to hospitals that serve a significantly high percentage of low-income patients.
- To calculate the DSH adjustment, the Department of Health and Human Services (HHS) calculates two fractions: a Medicare fraction (representing low-income seniors/disabled) and a Medicaid fraction (representing low-income non-seniors).
- The statute defines the Medicare fraction based on patient days made up of patients who were 'entitled to benefits under part A' of Medicare.
- HHS issued a regulation in 2004 interpreting 'entitled to benefits' to include all individuals who meet the basic statutory criteria for Medicare (being over age 65 or disabled), regardless of whether Medicare actually paid for the hospital stay.
- Under this regulation, a patient counts in the fraction even if Medicare did not pay because the patient had exhausted their benefits or had private insurance coverage.
- Empire Health Foundation, representing a hospital, challenged this regulation because counting these unpaid days generally increases the denominator of the fraction, thereby lowering the hospital's overall reimbursement rate.
- Empire argued that the statutory phrase 'entitled to benefits' should only apply to days where the patient actually had a right to have payment made by Medicare.
Procedural Posture:
- Empire Health Foundation sued the Secretary of Health and Human Services in Federal District Court challenging the 2004 regulation.
- The U.S. Court of Appeals for the Ninth Circuit ruled in favor of Empire Health Foundation, finding that 'entitled' meant a right to payment.
- The Secretary of Health and Human Services (Becerra) petitioned the U.S. Supreme Court for certiorari to resolve a circuit split.
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Issue:
Is a hospital patient considered 'entitled to benefits' under Medicare Part A for the purpose of calculating reimbursement rates when they meet the statutory requirements for Medicare but the program does not pay for their hospital stay on that specific day?
Opinions:
Majority - Justice Kagan
Yes, the Court held that 'entitled to benefits' refers to an individual's legal status as a qualified beneficiary of the Medicare program, not their receipt of actual payment. The Court reasoned that throughout the Medicare statute, 'entitled' is a term of art that applies to anyone who meets the basic criteria, such as turning 65 or receiving disability benefits for 24 months. The Court observed that interpreting 'entitled' to mean 'paid' would cause statutory incoherence, such as stripping beneficiaries of other rights (like enrollment in Part D prescription coverage) simply because their hospital coverage ran out. Furthermore, the Court explained that the two-fraction structure of the DSH adjustment is intended to capture two distinct populations—the elderly (Medicare) and the non-elderly (Medicaid)—and the HHS interpretation aligns with this demographic split.
Dissenting - Justice Kavanaugh
No, the dissent argued that a patient cannot be 'entitled' to have payment made by Medicare for a specific day if the statute expressly forbids Medicare from paying for that day. Justice Kavanaugh emphasized the statutory language 'entitled to have payment made' and the phrase '(for such days),' arguing that common sense dictates one is not entitled to a benefit they cannot receive. The dissent noted that HHS had followed this 'actual payment' interpretation from 1986 to 2003 and argued the change was merely a cost-saving measure that hurts hospitals serving low-income communities.
Analysis:
This decision reinforces the principle that statutory terms should be interpreted consistently throughout an entire act. By rejecting the 'actual payment' approach, the Court ensured that the definition of 'entitled' remains stable across various Medicare provisions, preventing a scenario where a patient's legal status fluctuates daily based on billing outcomes. The ruling upholds HHS's method of calculating DSH payments, which generally results in lower reimbursement rates for hospitals compared to the interpretation sought by Empire Health Foundation. This case illustrates the Court's reliance on the 'whole text' canon of statutory interpretation over arguments based on discrete parenthetical phrases or financial policy outcomes.
