The U.S. Supreme Court ruled Tuesday in favor of the Department of Health and Human Services (HHS), narrowing the scope of who qualifies a hospital for enhanced Medicare reimbursement payments tied to treating low-income patients. In a 7-2 decision in Advocate Christ Medical Center v. Kennedy, the justices sided with HHS in a dispute over the interpretation of the phrase "entitled to benefits" under the federal Supplemental Security Income (SSI) program.

At issue was whether patients enrolled in SSI but ineligible for cash benefits during the month they were hospitalized should still count toward a hospital's eligibility for a higher Medicare Disproportionate Share Hospital (DSH) payment. More than 200 hospitals argued that these patients should be included in the DSH calculation, claiming that HHS’s approach undercounted their treatment of low-income individuals and underfunded hospitals between 2006 and 2009.

Justice Amy Coney Barrett, writing for the majority, rejected the hospitals' claim, stating, "Congress made a specific choice: an individual is 'entitled to [SSI] benefits' when she is eligible to receive an SSI cash payment during the month of her hospitalization. We must respect the formula that Congress prescribed."

The Court’s ruling affirms the decisions of the U.S. District Court for the District of Columbia and the U.S. Court of Appeals for the D.C. Circuit, both of which upheld HHS’s method of calculating DSH payments as consistent with federal statute.

In dissent, Justice Ketanji Brown Jackson, joined by Justice Sonia Sotomayor, criticized the majority for what she called a “fundamental misunderstanding” of the SSI program. Jackson argued that the majority failed to consider that an individual may remain enrolled in SSI even if they are not receiving a cash payment in a particular month, thus disconnecting the court’s interpretation from the real-world function of the program.

The case is built on legal questions left unresolved in the Court’s 2022 decision in Becerra v. Empire Health Foundation. In Empire, the Court ruled that the phrase "entitled to [Medicare Part A] benefits" includes anyone who qualifies for Medicare, regardless of whether Medicare actually paid for the hospital stay. However, the Court had left open the question of how to interpret entitlement to SSI benefits in the context of Medicare reimbursement calculations.

The petitioning hospitals, including Advocate Christ Medical Center in Oak Lawn, Illinois, originally sued HHS in 2017, challenging the agency's longstanding formula for determining DSH payments. Their suit claimed the calculation failed to adequately reflect the number of low-income patients they served, using eligibility for SSI benefits as a proxy for poverty. After a series of defeats in lower courts, the Supreme Court’s decision now ends the litigation in HHS’s favor.

The decision may limit how hospitals nationwide can qualify for the higher DSH adjustment, a key source of funding for institutions serving economically disadvantaged populations. While hospitals can still receive DSH payments, they must now demonstrate that eligible patients received SSI cash benefits during the relevant month of hospitalization in order to count toward the reimbursement calculation.