Supreme Court Rules Against HHS in DSH Payment Case
June 2019 ~
In a 7-1 decision, the Supreme Court ruled in favor of the nine hospitals that said the Department of Health and Human Services (HHS) violated the Medicare Act when it changed Medicare’s reimbursement adjustment formula for disproportionate share hospitals without providing notice and opportunity to comment.
The Court affirmed a 2017 judgment from the Court of Appeals, which ruled that HHS violated the Medicare Act by including Part C patients in the calculations of DSH payments without going through the notice-and-comment rulemaking procedures.
The ruling, issued on June 3, states that HHS failed to properly seek public comment before making the DSH payment modifications in 2014 and also failed to find legal footing to defend its decision to post the changes without a customary comment window.
“In 2014, the government revealed a new policy on its website that dramatically—and retroactively—reduced payments to hospitals serving low-income patients,” wrote Supreme Court Justice Neil Gorsuch in the opinion.
The Court rejected HHS’ argument that the rule “threatens to undermine HHS’ ability to administer the Medicare program in a workable manner,” and held that the agency had not met its burden to avoid notice and comment requirements for its determination of certain DSH payments.
“Because affected members of the public received no advance warning and no chance to comment first, and because the government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations, we agree with the court of appeals that the new policy cannot stand,” Justice Gorsuch continued.