At issue in the case was 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 Supreme Court heard the case after a federal appellate court tossed the rule.
“Today, we approve HHS’ understanding of the Medicare fraction,” Justice Elena Kagan wrote for the 5-4 majority, according to the report.
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