NOTICE: This opinion is subject to
formal revision before publication in the preliminary print of the
United States Reports. Readers are requested to notify the Reporter
of Decisions, Supreme Court of the United States, Washington,
D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print
goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 20–1312
_________________
XAVIER BECERRA, SECRETARY OF HEALTH AND HUMAN
SERVICES, PETITIONER
v. EMPIRE HEALTH FOUNDATION, FOR VALLEY
HOSPITAL MEDICAL CENTER
on writ of certiorari to the united states
court of appeals for the ninth circuit
[June 24, 2022]
Justice Kagan delivered the opinion of the
Court.
The Medicare program reimburses hospitals at
higher-than-usual rates when they serve a higher-than-usual
percentage of low-income patients. The enhanced rates are
calculated by adding together two fractions, called the Medicare
fraction and the Medicaid fraction. Roughly speaking, the former
measures the hospital’s low-income senior-citizen population, and
the latter the hospital’s low-income non-senior population.
This case raises a technical but important
question about the Medicare fraction. The statutory description of
that fraction refers to “the number of [a] hospital’s patient days”
attributable to low-income patients “who (for such days) were
entitled to benefits under part A of [Medicare].” 42
U. S. C. §1395ww(d)(5)(F)(vi)(I). According to the
Department of Health and Human Services (HHS), a person is
“entitled to [Part A] benefits” under the statute if he qualifies
for the Medicare program—essentially, if he is over 65 or disabled.
That remains so even when Medicare is not paying for part or all of
his hospital stay—for example, because a private insurer is legally
responsible or because he has used up his allotted coverage. Today,
we approve HHS’s understanding of the Medicare fraction.
I
The Medicare program provides
Government-funded health insurance to over 64 million elderly or
disabled Americans. (The vast majority of that number are senior
citizens.) When a person turns 65 or has received federal
disability benefits for 24 months, he automatically (
i.e.,
without application or other filing) becomes “entitled” to benefits
under Medicare Part A. §§426(a)–(b)
. The most significant
Part A benefit is coverage for inpatient hospital treatment; Part A
also covers associated physician and skilled nursing services. See
§1395d(a); HHS, CMS Ruling No. CMS–1498–R, p. 10 (Apr. 28, 2010),
https:// www.cms.gov/regulations-and-guidance/guidance/rulings
/downloads/cms1498r.pdf (CMS–1498–R). In addition, entitlement to
Part A generally enables a patient to enroll (if he wishes) in
Medicare’s other programs: Part B’s coverage for outpatient care;
Part C’s coverage through privately administered Medicare Advantage
plans; and Part D’s coverage for prescription drugs. See
§§1395
o(a)(1), 1395w–21(a)(3), 1395w–101(a)(3)(A).
The Medicare program pays a hospital a fixed
rate for treating each Medicare patient, based on the patient’s
diagnosis and regardless of the hospital’s actual costs.
§§1395ww(d)(1)–(4). The rates are designed to reflect the amounts
an efficiently run hospital, in the same region, would expend to
treat a patient with the same diagnosis. See 42 CFR §412.2 (2022).
If the hospital spends anything more, it suffers a financial loss.
The flat-rate payment system thus gives hospitals an incentive to
provide efficient levels of medical service.
But Congress, recognizing complexity in
healthcare, provided for various hospital-specific rate
adjustments—including the one at issue here for treating low-income
patients. The “disproportionate share hospital” (DSH) adjustment
gives hospitals serving an “unusually high percentage of low-income
patients” enhanced Medicare payments.
Sebelius v.
Auburn
Regional Medical Center,
568 U.S.
145, 150 (2013). The mark-up reflects that low-income
individuals are often more expensive to treat than higher income
ones, even for the same medical conditions. In compensating for
that disparity, the DSH adjustment encourages hospitals to treat
low-income patients.
To calculate a hospital’s DSH adjustment, HHS
adds together two statutorily described fractions, usually called
the Medicare fraction and the Medicaid fraction. Those fractions
are designed to capture two different low-income populations that a
hospital serves. The
Medicare fraction represents the
proportion of a hospital’s Medicare patients who have low incomes,
as identified by their entitlement to supplementary security income
(SSI) benefits. SSI is a “welfare program” providing benefits to
“financially needy individuals” who (like Medicare patients
generally) are over 65 or disabled.
Bowen v.
Galbreath,
485 U.S.
74, 75 (1988); see §§1382(a)(1), 1382c(a)(1). The
Medicaid fraction represents the proportion of a hospital’s
patients who are not entitled to Medicare and have low incomes, as
identified by their eligibility for Medicaid. The Medicaid program
provides health insurance to all low-income individuals, regardless
of age or disability. See §1396d(a). So at a high level of
generality, the Medicare fraction is a measure of a hospital’s
senior (or disabled) low-income population, while the Medicaid
fraction is a measure of a hospital’s non-senior (except for
disabled) low-income population.
With that under your belt, you might be ready to
absorb the relevant statutory language (but don’t bet on it). The
Medicare fraction is described as:
“[a] fraction (expressed as a percentage),
the numerator of which is the number of [a] hospital’s patient days
for [the fiscal year] which were made up of patients who (for such
days) were entitled to benefits under part A of [Medicare] and were
entitled to [SSI] benefits[ ], and the denominator of which is
the number of such hospital’s patient days for such fiscal year
which were made up of patients who (for such days) were entitled to
benefits under [Medicare] part A.” §1395ww(d)(5)(F) (vi)(I).
That is a mouthful (and without the brackets,
it’s even worse). So again, in general terms: The numerator is the
number of patient days attributable to Medicare patients who are
poor. The denominator is the number of patient days attributable to
all Medicare patients. Divide the former by the latter to get the
fraction “expressed as a percentage.”
Ibid.
And similarly for the Medicaid fraction. That
fraction is described as:
“[a] fraction (expressed as a percentage),
the numerator of which is the number of [a] hospital’s patient days
for [the fiscal year] which consist of patients who (for such days)
were eligible for medical assistance under [Medicaid], but who were
not entitled to benefits under part A of [Medicare], and the
denominator of which is the total number of the hospital’s patient
days for such [fiscal year].” §1395ww(d)(5)(F)(vi)(II).
That too is a lot to digest. So again, in
general terms: The numerator is the number of patient days
attributable to non-Medicare patients who are poor. The denominator
is the total number of patient days. Divide the former by the
latter to get the second percentage the DSH calculation
requires.[
1]
Once both percentages have been calculated, they
are added together to produce the “disproportionate-patient
percentage.” That percentage determines whether a hospital will
receive a DSH adjustment, and if so, how large it will be. The
combined percentage must usually equal or exceed 15% for a hospital
to get an adjustment. See §1395ww(d)(5)(F)(v). So, for example, if
a hospital’s Medicare fraction is 10% and its Medicaid fraction is
5%, then the hospital would qualify for increased rates. The higher
the disproportionate-patient percentage goes, the greater the rate
mark-up that the hospital will receive.
§§1395ww(d)(5)(F)(vii)–(xiv).
This case is about how to count patients who
qualify for Medicare Part A—because they are over 65 or disabled—at
times when the program is not paying for their hospital treatment.
Such non-payment may occur for a number of reasons. For one,
Medicare usually pays for only the first 90 days of a hospital stay
associated with a single “spell of illness.” See §1395d; 42 CFR
§409.61(a). If a patient’s stay for an illness exceeds that limit,
his coverage is “exhausted.” §409.61(a). For another, Medicare pays
for hospital treatment only once a patient has used up other
medical insurance. See §1395y(b)(2)(A). So if a patient has a
private insurance plan, or is injured by a tortfeasor with
insurance, Medicare will not pay unless and until that other policy
runs dry. Limits like those prompt the question presented here: Are
patients whom Medicare insures but does not pay for on a given day
“entitled to [Medicare Part A] benefits,” for purposes of computing
a hospital’s disproportionate-patient percentage?
§§1395ww(d)(5)(F)(vi)(I–II).
An HHS regulation, issued in 2004, says those
patients remain so entitled. See 69 Fed. Reg. 48916. Under the
regulation, whether Medicare is actually paying for a patient’s
hospital treatment is irrelevant. So, for example, it does not
matter that a patient has exhausted his 90 days of coverage for an
illness, or that a private insurer is paying for his hospital stay.
As long as the patient meets the basic statutory criteria for
Medicare (
i.e., he is over 65 or disabled), then the patient
counts in the denominator and, if he is poor, in the numerator of
the Medicare fraction (as “entitled to [Medicare Part A]
benefits”). See
id., at 49098–49099. And by the same token,
he does
not count in the numerator of the Medicaid fraction
(which includes only those “not entitled to [Medicare Part A]
benefits”). See
ibid. As HHS explained in 2004, the effect
of the regulation varies depending on the makeup of a hospital’s
patient population. See
ibid. But for most hospitals, the
regulation has worked to decrease DSH payments, because as
beneficiaries are added to the Medicare fraction’s denominator
(even though poor beneficiaries are also added to its numerator), a
hospital’s Medicare fraction generally (though not always) goes
down. See Letter from E. Prelogar, Solicitor General, to S. Harris,
Clerk of Court (Nov. 23, 2021).
Respondent Empire Health Foundation challenged
the regulation as inconsistent with the statutory fraction
descriptions, and the Court of Appeals for the Ninth Circuit
agreed. See
Empire Health Foundation v.
Azar, 958
F.3d 873 (2020). The court focused on the statute’s use of two
different phrases: “entitled to [Medicare Part A] benefits” and (in
the Medicaid fraction alone) “eligible for [Medicaid] assistance.”
Id., at 885. Relying on Circuit precedent, the court read
the latter, “eligible” phrase to “mean that a patient simply meets
the Medicaid statutory criteria”—regardless of whether “Medicaid
actually paid” for a given service on a given day.
Ibid.
That approach, of course, is analogous to the one the HHS
regulation adopts for Medicare beneficiaries. But the Ninth Circuit
reasoned that the statutory language relating to Medicare is
different: It asks whether a person is “entitled to” (not “eligible
for”) benefits. And the word “entitled,” the court held (relying on
the same precedent), “mean[s] that a patient has an ‘absolute right
. . . to payment.’ ”
Ibid. (ellipsis in
original). So even if a patient is over 65, he is not “entitled to
[Medicare Part A] benefits” within the meaning of the statute for
any hospital stay, or part thereof, Medicare is not paying for.
As the Ninth Circuit recognized, two other
Courts of Appeals had deferred to HHS’s contrary view of the
statute and upheld the regulation. See
Metropolitan Hospital
v.
Department of Health and Human Servs., 712 F.3d 248 (CA6
2013);
Catholic Health Initiatives Iowa Corp. v.
Sebelius, 718 F.3d 914 (CADC 2013). We granted certiorari to
resolve the conflict. See 594 U. S. ___ (2021).[
2]
II
HHS’s regulation correctly construes the
statutory language at issue. The ordinary meaning of the fraction
descriptions, as is obvious to any ordinary reader, does not
exactly leap off the page. See
Catholic Health Initiatives,
718 F. 3d, at 916 (The “language is downright byzantine”). The
provisions are technical: They call to mind Justice Frankfurter’s
injunction that when a statute is “addressed to specialists, [it]
must be read by judges with the minds of the specialists.” Some
Reflections on the Reading of Statutes, 47 Colum. L. Rev. 527,
536 (1947). But when read in that suitable way, the fraction
descriptions disclose a surprisingly clear meaning—the one chosen
by HHS. The text and context support the agency’s reading: HHS has
interpreted the words in those provisions to mean just what they
mean throughout the Medicare statute. And so too the structure of
the DSH provisions supports HHS: Counting everyone who qualifies
for Medicare benefits in the Medicare fraction—and no one who
qualifies for those benefits in the Medicaid fraction—accords with
the statute’s attempt to capture, through two separate
measurements, two different segments of a hospital’s low-income
patient population.
A
Speaking of twos, Empire’s textual argument
also has a bifurcated structure—but neither part can produce its
desired result. Empire primarily contends, echoing the Ninth
Circuit, that “different words [mean] different things” when used
in a single statute—and so “entitled” means something different
from “eligible.” Brief for Respondent 22. To be “eligible” for a
benefit, Empire says, is to be “qualified” to seek it; to be
“entitled” to a benefit means instead to have an “absolute right”
to its payment.
Id., at 4, 30. But that reading, even if
plausible in the abstract, does not work in the Medicare statute.
There, “entitled to benefits” is essentially a term of art, used
over and over to mean qualifying (or, yes, being eligible) for
benefits—
i.e., being over 65 or disabled. And in the end,
Empire basically concedes that point. It must devise a way to give
“entitled to benefits” a different meaning in the fraction
descriptions than the phrase has everywhere else in the Medicare
law. See Tr. of Oral Arg. 37–41. So Empire shifts gears, relying
now on the parenthetical phrase “(for such days)” to do its work—to
transform the usual statutory meaning of “entitled to benefits” to
something different and novel. See
ibid.;
§1395ww(d)(5)(F)(vi)(I) (“patients who (for such days) were
entitled to [Medicare Part A] benefits”). (The dissent, for its
part, focuses most of its energies on this latter stage of Empire’s
argument.) But those three little words do not accomplish what
Empire would like, having the much less radical function of
excluding days of a patient’s hospital stay before he qualifies for
Medicare (
e.g., turns 65). So contrary to Empire’s claim,
being “entitled” to Medicare benefits still means—in the fraction
descriptions, as throughout the statute—meeting the basic statutory
criteria, not actually receiving payment for a given day’s
treatment.
1
First and foremost, the Medicare statute
explicitly identifies which individuals are “entitled to hospital
insurance benefits under part A”—all people who meet the basic
statutory criteria. §§426(a)–(b). “Every individual,” the law
states, who “has attained age 65” and is entitled to ordinary
social security payments “shall be entitled to” Medicare Part A
benefits. §426(a). So too, “every individual” under age 65 who has
been entitled to federal disability benefits for at least 24 months
“shall be entitled” to Medicare Part A benefits. §426(b). The
“[e]ntitlement to hospital insurance benefits” (as the section
caption reads) is “automatic”: Age or disability makes a person
“entitled” to Part A benefits without an application or anything
more. §426;
Hall v.
Sebelius, 667 F.3d 1293,
1294–1296 (CADC 2012). Turn 65 or receive disability benefits for
24 months, and you have an entitlement to Part A benefits—because
the latter is, according to the statute, simply a legal status
arising from the former.[
3]
That broad meaning of “entitlement” coexists
with limitations on payment, as several statutory provisions show.
The entitlement to
benefits, the statute repeatedly says, is
an entitlement to
payment under specified conditions.
To quote one provision: “entitlement of an individual” to Medicare
Part A benefits “consist[s] of entitlement to have payment made
under, and subject to the limitations in, part A.” §426(c)(1); see
§1395d(a) (similarly stating that the entitlement to benefits
entails the receipt of “payment[s] . . . subject to the
provisions of this part”). Those limits on payment include, as
described earlier, the 90-day hospital-stay cap. See
supra,
at 5–6. And indeed the statute twice refers to patients who are
“entitled to benefits under part A but ha[ve] exhausted benefits
for inpatient hospital services.” §§1395
l(a)(8)(B)(i),
1395
l(t)(1)(B)(ii). Under Empire’s reading, that statement
makes no sense: A patient is not, Empire argues, “entitled to
benefits” when the statute precludes payment. See
supra, at
8. But the statute says otherwise. It considers those who have
exhausted their coverage (and so cannot receive further payments
for a hospital stay) still “entitled to [Part A] benefits.”
In thus describing the Part A entitlement, the
Medicare statute reflects the complexity of health insurance.
Consider your own health plan (maybe it
is Medicare). You
might have hit some limit on coverage as to one medical
service—let’s say, eye care. But you’re still insured: Your policy
will pay for more eye care in the next coverage period and
meanwhile will pay for your knee replacement. So it is with
Medicare Part A. As the 2004 regulation explains, patients “who
have exhausted their Medicare Part A inpatient coverage may still
be entitled to other Part A benefits.” 69 Fed. Reg. 49098. Medicare
Part A also covers, “for example, certain physician services and
skilled nursing services” outside the hospital setting. See
CMS–1498–R, at 10. And even as to hospital care, another 90 days of
coverage will be available for another illness. See
supra,
at 5. For that reason among others, HHS has noted, the stoppage of
payment for any given service cannot be thought to affect the
broader statutory entitlement to Part A benefits. See 69 Fed. Reg.
49098. That entitlement arises when a person meets the basic
statutory qualifications and (unless a disability diminishes) never
goes away.
If “entitled to [Part A] benefits” instead bore
Empire’s meaning, Medicare beneficiaries would lose important
rights and protections. Perhaps most significantly, a patient could
lose his ability to enroll in other Medicare programs whenever he
lacked a right to Part A payments for hospital care. As noted
earlier, a person’s entitlement to Part A benefits is usually the
predicate for his enrollment in Part B (covering outpatient care),
Part C (providing coverage through privately managed plans), or
Part D (offering prescription-drug benefits). See
§§1395
o(a), 1395w–21(a)(3), 1395w–101(a)(3)(A);
supra, at 2. So if (as Empire urges) a hospitalized patient
is not “entitled to [Part A] benefits” on any day he cannot get
Part A payments, then he could be locked out of the benefits of
Parts B through D at that time. Consider what that might mean in
the real world: A Medicare patient in the hospital for longer than
90 days—by definition, a very ill person—could not enroll in Part
D’s prescription-drug coverage. Congress could not have wanted—and
in fact did not provide for—that result.
Empire’s interpretation would also make a hash
of provisions designed to inform Medicare beneficiaries of their
benefits. The statute requires annual notice to individuals
“entitled to benefits under part A” concerning all available
program benefits, including any “limitations on payment.”
§1395b–2(a). Under Empire’s reading, that notice requirement would
phase in and out depending on whether Medicare Part A was currently
paying for the individual’s hospital treatment. HHS, for example,
would have no obligation to inform a patient of benefits when a
private insurer was paying for his hospital care, even if that
policy would soon run out and Medicare would assume the coverage.
Once again, Congress would not have drafted such an on-again,
off-again notice requirement.
So too, Empire’s reading of “entitled to [Part
A] benefits” would subvert a provision to protect beneficiaries
from misleading marketing materials. Under the statute, an insurer
offering a Part C (privately managed Medicare) plan may not
distribute advertising materials to eligible beneficiaries unless
the materials are first cleared by HHS. See §1395w–21(h)(1).
Eligible beneficiaries are individuals “entitled to benefits under
Part A” and enrolled in Part B. §1395w–21(a)(3). If Empire is right
about what the “entitled to” phrase means, an insurer could send
whatever it wanted to a patient who at that time lacked a right to
Part A payments. But such a person might well be interested in
eventually enrolling in a Part C plan—and he is no less vulnerable
to deceptive marketing than anyone else.
And the problems with Empire’s interpretation do
not stop there. The Sixth and D. C. Circuits have cataloged
several other statutory provisions that Empire’s reading would
render unworkable or unthinkable or both. See
Metropolitan
Hospital, 712 F. 3d, at 260;
Northeast Hospital
Corp. v.
Sebelius, 657 F.3d 1, 6–11 (CADC 2011). We
could spell out each one in painful detail, but we think the above
should suffice. Applying Empire’s reading of “entitled to [Part A]
benefits” across the Medicare statute would diminish the
beneficiary protections Congress wrote into law. Those safeguards
would apply or not apply, or fluctuate constantly between the two,
based on the happenstance of whether Medicare paid for hospital
care on a given day. Once again, that is not the statute Congress
wrote.
2
Faced with these many provisions, Empire
swerves. Empire effectively (if reluctantly) concedes that its
reading of “entitled to [Part A] benefits”—again, to have an
“absolute right” to Part A payments—cannot be applied throughout
the Medicare statute. Brief for Respondent 30; see
id., at
41–42; Tr. of Oral Arg. 37–39. There, over and over—and contra the
main thrust of Empire’s arguments—the concepts of entitlement and
eligibility are the same. So Empire must come up with a way of
converting the ordinary meaning of “entitled” in the Medicare law
to something different in its fraction provisions. The lever Empire
proposes to use for that purpose is the parenthetical phrase “(for
such days).” See Tr. of Oral Arg. 38–39 (“[T]he key distinction” is
“for such days,” which is “language that’s not found anywhere
else”). Empire argues that when “entitled” is married to “(for such
days)”—recall the whole phrase, “patients who (for such days) were
entitled to [Part A] benefits”—the idea of entitlement morphs.
§1395ww(d)(5)(F)(vi)(I). Now it does not mean meeting Medicare’s
statutory (age or disability) criteria on the days in question, but
instead means actually receiving Medicare payments. (The dissent
makes much the same argument.)
But we cannot understand Congress to have
changed the statute’s consistent meaning of “entitled to benefits”
simply by adding “(for such days).” That slight phrase is incapable
of bearing so much interpretive weight. If Congress “does not alter
the fundamental[s]” of a statutory scheme “in vague terms or
ancillary provisions,” then it ordinarily does not do so in
parentheticals either.
Whitman v.
American Trucking
Assns., Inc.,
531 U.S.
457, 468 (2001). To the contrary, a parenthetical is “typically
used to convey an aside or afterthought.”
Boechler v.
Commissioner, 596 U. S. ___, ___ (2022) (slip op., at
5) (internal quotation marks omitted). And nothing about the “(for
such days)” parenthetical signals anything different. Empire asks
us to read it as transforming the uniform statutory meaning of
“entitled to benefits” for the fraction provisions alone. But if
Congress had wanted to accomplish that unexpected object, it would
simply have said so. Or else, to make only paid-for days count, it
would have dropped the language of entitlement altogether. What it
would not have done is upend the settled meaning of that language,
in this one place, through so subtle, indirect, and opaque a
mechanism.
The “(for such days)” phrase instead works as
HHS says: hand in hand with the ordinary statutory meaning of
“entitled to [Part A] benefits.” The parenthetical no doubt tells
HHS to ask about a patient on a given day. But the query the agency
must make is not whether that patient on that day has received Part
A payments; the query is, consistent with what “entitled” means all
over the statute, whether that patient on that day is qualified to
do so. Suppose, for example, that a patient turns 65 halfway
through a 30-day hospital stay. HHS will then count only 15 days of
his stay when computing the Medicare fraction. Or suppose,
similarly, that midway through his stay, a patient begins to
qualify as disabled—because, under the statutory definition, he has
reached his 25th month of federal disability benefits. Then, too,
only the second half of the patient’s stay would go into the
fraction—because only then has he met the criteria for
benefits.
Empire complains that the phrase “(for such
days),” viewed in that way, does too “little work.” Brief for
Respondent 38; Tr. of Oral Arg. 40–41. But it does more than
enough. Some 10,000 people turn 65 in this country every day, thus
qualifying for Medicare coverage. See American Assn. of Retired
Persons, The Aging Readiness & Competitiveness Report: United
States 2, https://arc.aarpinterna
tional.org/File%20Library/Full%20Reports/ARC-Report---United-States.pdf.
Many other individuals daily attain their 25th month on federal
disability benefits. It is natural for Congress to have thought of
those facts when devising the fractions. By the way, said Congress
(in what truly is an “aside or afterthought”): If someone turns 65
during the year the fraction covers, make sure to exclude his
pre-birthday hospital days.
Boechler, 596 U. S., at ___
(slip op., at 5) (internal quotation marks omitted). Only count the
days after he qualifies for Medicare Part A—when, under the
statute’s constant meaning, he is “entitled to [Part A]
benefits.”[
4]
B
The structure of the relevant statutory
provisions reinforces our conclusion that “entitled to [Part A]
benefits” means qualifying for those benefits, and nothing more. As
earlier explained, the statute is designed to recompense hospitals
for serving low-income patients, who are comparatively more
expensive to treat. See
supra, at 3. The statute determines
the appropriate payment (if any) by measuring, through two separate
fractions, two separate populations: the low-income Medicare
population and the low-income non-Medicare population. See
supra, at 3.[
5] (Because
the vast majority of Medicare patients are over 65, that roughly
translates into the low-income senior population and the low-income
non-senior population.) Those populations, taken together, account
for all the low-income patients a hospital treats.
HHS’s reading of “entitled” comports with the
statute’s two-population structure. A low-income Medicare patient
always counts in the Medicare fraction. That is so regardless of
whether the Medicare program is actually paying for a day of his
care—because that fact has no relationship to his financial status.
The Medicare fraction, as calculated by HHS, thus captures the
entire low-income Medicare (
i.e., senior) population. And
correlatively, the Medicaid fraction captures the entire low-income
non-Medicare (
i.e., non-senior) population. The binary
dividing line HHS uses—do you qualify for Medicare?—mirrors the
statute’s binary, population-focused framework. All low-income
people fit naturally into one or the other box, with the sum of the
two leaving no one out.
By contrast, Empire’s view fits poorly with the
bifurcated, population-based statutory structure. Again, its
who-paid-for-a-day-of-care test has no relationship to a patient’s
financial status. So on Empire’s view, a patient could phase in and
out of the Medicare fraction even though his income remains the
same. Empire responds by asserting that any low-income person
excluded from the Medicare fraction (say, because of exhaustion of
benefits) would get counted instead in the Medicaid fraction. See
Brief for Respondent 15–16, 50–51. But even if that is true—we
express our doubts below—Empire’s scheme would result in patients
ping-ponging back and forth between the two fractions based on the
happenstance of actual Medicare payments, sometimes during a single
hospital stay. That scheme is of course harder to administer than
HHS’s. And still more, it does not reflect the statute’s dichotomy
between two discrete low-income populations, each of which counts
(but counts differently) toward setting a hospital’s DSH rate. See
supra, at 4, n. 1, 16, n. 5.
In any event, Empire is too quick to claim that
those who (on its view) are tossed from the Medicare fraction for
non-income-based reasons would still wind up in the Medicaid
fraction. Recall here the role Empire says the phrase “(for such
days)” plays. See
supra, at 13–15. According to Empire’s
ultimate argument, that phrase is what converts the ordinary
statutory meaning of “entitled to benefits” (
i.e.,
qualifying for Medicare) to a special meaning (
i.e.,
actually receiving payments). So where the phrase “(for such days)”
does not appear, the usual meaning of “entitled” should govern. Now
look again at the description of the Medicaid fraction. It counts
“patients [i] who (for such days) were eligible for [Medicaid], but
[ii] who were not entitled to benefits under part A [of Medicare].”
§1395ww(d)(5)(F)(vi)(II). In that description, “for such days” does
not modify clause [ii]. So the “not entitled” phrase in that
clause should mean (consistent with the rest of the statute) not
qualifying for Medicare. But those whom Empire’s view would oust
from the Medicare fraction—say, because of exhaustion—
do
qualify for Medicare. They thus fall outside clause [ii]—and
outside the Medicaid fraction. The upshot is that, under Empire’s
reading, a low-income patient who, say, has exhausted his coverage
will not get counted at all. But that person remains just as low
income as he ever was, imposing just as high costs on the hospital
treating him. His exclusion demonstrates, if anything more needs
to, the error of Empire’s reading.
Empire’s only response is to insist that its
interpretation has to be right because it usually (though not
always) leads to higher DSH payments for hospitals. See Brief for
Respondent 33–35;
supra, at 6. But the point of the DSH
provisions is not to pay hospitals the most money possible; it is
instead to compensate hospitals for serving a disproportionate
share of low-income patients. And Empire’s reading excels only by
the former measure, not by the latter one. As just shown, Empire’s
actual-payment test counts fewer, not more, of the low-income
patients the DSH provisions care about. The reason that approach
still benefits many hospitals is that it deflates the denominator
of the Medicare fraction. Consider a wealthy 70-year-old patient
who has exhausted Medicare benefits—or, as is often true, has a
private insurance policy. HHS’s view would exclude him from the
Medicare fraction’s numerator (because he is wealthy) but keep him
in the denominator (because he is over 65). By contrast, Empire’s
view would exclude him from both the numerator and the
denominator—the latter because he is not actually receiving
Medicare payments. That move increases payments to hospitals—but
only because it fails to capture high-income Medicare patients, not
because it better captures low-income ones. Or said otherwise, it
increases payments because it distorts what the Medicare fraction
is designed to measure—the share of low-income Medicare patients
relative to the total.
III
Text, context, and structure all support
calculating the Medicare fraction HHS’s way. In that fraction,
individuals “entitled to [Medicare Part A] benefits” are all those
qualifying for the program, regardless of whether they are
receiving Medicare payments for part or all of a hospital stay.
That reading gives the “entitled” phrase the same meaning it has
throughout the Medicare statute. And it best implements the
statute’s bifurcated framework by capturing low-income individuals
in each of two distinct populations a hospital serves.
For those reasons, we reverse the judgment of
the Court of Appeals and remand the case for further proceedings
consistent with this opinion.
It is so ordered.
