The Supreme Court ruled Tuesday that the federal government can use a narrower method to calculate Medicare payments to hospitals that treat low-income patients, siding with the Department of Health and Human Services and rejecting a challenge from more than 200 hospitals in 30 states.
In a 7–2 decision, the justices rejected arguments from the hospitals, which claimed the reimbursement formula undercounts eligible patients by excluding those enrolled in the Supplemental Security Income (SSI) program who did not receive a payment during their hospital stay.
The ruling upheld a decision from the U.S. Court of Appeals for the District of Columbia Circuit and centered on how to interpret the term “entitled” in the Medicare statute. Writing for the majority, Justice Amy Coney Barrett said Congress clearly intended the calculation to be based on the number of hospitalized patients who actually received an SSI check during a given month—not everyone enrolled in the program more broadly.
“We must respect the formula that Congress prescribed,” Barrett wrote, emphasizing that the statutory language refers specifically to those who were issued benefits while hospitalized.
The case, Advocate Christ Medical Center et al. v. Kennedy, Secretary of Health and Human Services, concerned reimbursement rates for the years 2006 through 2009. The hospital groups argued the government’s method excluded many low-income patients, including those receiving non-cash benefits or awaiting checks, leading to underpayment for essential services. They claimed the decision could impact over $4 billion in reimbursements nationwide.
Justice Ketanji Brown Jackson, joined by Justice Sonia Sotomayor, dissented. She criticized the majority’s focus on monthly check issuance, saying it overlooks the fluctuating nature of SSI eligibility and the delay in payment processing. Jackson warned that the decision undermines the broader purpose of the Medicare program, which was designed to support hospitals serving the nation’s most vulnerable patients.
“The illogic of the majority’s interpretation strongly signals that what the majority believes Congress ‘chose’ is not actually what Congress intended or accomplished,” Jackson wrote.
Hospitals involved in the case had warned that the financial consequences of the ruling could jeopardize care for low-income communities and strain facilities already operating on thin margins.
The Biden administration defended the narrower interpretation, arguing it reflects the statute as written and is consistent with longstanding HHS policy.
With the Court siding with HHS, the decision reinforces the federal government’s control over how key Medicare funds are distributed and marks a continued legal trend of deferring to agencies on complex administrative interpretations.