Supreme Court justices baffled by Medicare payment rule

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Several justices on the Supreme Court seemed reluctant Nov. 29 to reinstate changes HHS made to how Medicare payments are calculated for hospitals that serve a disproportionate number of low-income patients, according to Bloomberg Law

During oral arguments Nov. 29, several justices expressed frustration with the complicated Medicare payment rule that has spawned litigation. Justice Clarence Thomas said the language in the rule is "indecipherable," and Justice Stephen Breyer said he was exhausted by the dispute. 

At issue in the case is a rule finalized in 2005 that changed how HHS calculates disproportionate share hospital payments. The formula HHS uses is based on the sum of the Medicare fraction and Medicaid fraction. The 2005 rule changed how the Medicare fraction is calculated. 

HHS said it followed all substantive and procedural requirements when implementing the rule. Spokane, Wash.-based Empire Health Foundation argued that the new calculation leads to a severe undercount of the low-income patient pool. 

The case landed at the Supreme Court after the U.S. Court of Appeals for the 9th Circuit tossed the rule. HHS argued that the ruling created a split among appeals courts that the Supreme Court must resolve, as both the D.C. and 6th circuits previously sided with the agency, according to Bloomberg Law

After hearing arguments Nov. 29, a majority of justices seemed reluctant to reinstate the rule, with Justice Brett Kavanaugh identifying what he sees as five problems with the rule. "We've whacked agency rules for much less than that," he said. 

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