Becerra v. Empire Health Foundation, For Valley Hospital Medical Center

In Becerra v. Empire Health Foundation, the U.S. Supreme Court reviewed a rule by the Department of Health and Human Services (HHS) that altered the formula for Medicare disproportionate share hospital (DSH) payments. The rule excluded patient days for individuals who were eligible for Medicaid but whose care was covered by Medicare or private insurance. Empire Health Foundation and Valley Hospital Medical Center challenged the rule, and the Ninth Circuit invalidated it. On June 24, 2022, the Supreme Court reversed, holding 5-4 that HHS's interpretation was a reasonable reading of the ambiguous statutory text. Justice Elena Kagan wrote for the majority, finding that Congress gave HHS authority to define how patient days are counted for DSH adjustments. The decision restored the HHS rule and potentially reduced supplemental payments to safety-net hospitals.

The U.S. Supreme Court reversed the Ninth Circuit in a 5-4 decision. It held that the HHS regulation was a permissible construction of the ambiguous Medicare DSH provision, upholding the agency's method of counting patient days.

Whether the HHS rule reasonably interpreted the Medicare statute by excluding from the DSH calculation patient days for individuals who are eligible for Medicaid but whose hospital stays are paid by other insurers.

The ruling directly affected federal payments to hospitals serving large numbers of low-income patients, with estimates of billions of dollars in DSH funding at stake. It reinforced judicial deference to reasonable agency interpretations of complex healthcare statutes. Safety-net hospitals expressed concern over reduced resources, while the government emphasized consistency and fiscal responsibility in the Medicare program.