The US Supreme Court on Tuesday ruled in favor of the Department of Health and Human Services (HHS) in a dispute over Medicare reimbursements paid to hospitals. The 7-2 decision effectively limits the number of patients for whom hospitals can receive federal reimbursement. 

Medicare is a federal program that provides health insurance to elderly and disabled Americans. Individuals on Medicare can sometimes also qualify for the Supplementary Security Income (SSI) program, which pays a monthly subsistence allowance to people with disabilities and older adults who have limited resources. Tuesday’s Supreme Court ruling addresses federal payments made to hospitals who treat patients in each of these programs.

The Disproportionate Share Hospital (DSH) adjustment is a supplemental payment made annually to hospitals. Hospitals can qualify for this reimbursement based on the percentage of services they provide to patients “eligible” for Medicare and SSI; this is known as the “Medicare fraction.” Under federal regulation this percentage is calculated based on patients who are “entitled to” benefits. 

In a 2022 case relating to Medicare reimbursement, the Supreme Court held individuals who are “entitled” to benefits are “all those qualifying for the program, regardless of whether they receive Medicare payments for part or all of a hospital stay.” Courts have not directly addressed the definition of entitlement related to SSI. Plaintiff-hospitals argued that this should include all patients enrolled in the SSI system at the time of their hospitalizations, even if the patients were not entitled to an SSI payment during that specific month.

The Court disagreed with this interpretation in its decision on Tuesday. In the majority opinion, Justice Amy Coney Barrett wrote that “a person is entitled to such benefits when she is eligible to receive a cash payment during the month of her hospitalization.” The ruling explained that cash benefits must follow Social Security Administration subchapter XVI, which defines eligibility on a month-to-month basis. 

Justices Ketanji Brown Jackson and Sonia Sotomayor dissented, stating that the majority ruling cuts against the true context of the guiding legislation: “Congress’s ultimate goal was to provide hospitals that serve the neediest among us with the appropriate level of critical funds.”