Page:Azar v. Allina Health Services, 587 U.S. (2019) (slip opinion).pdf/6

Rh national coverage determination) that establishes or changes a substantive legal standard governing the scope of benefits, the payment for services, or the eligibility of individuals, entities, or organizations to furnish or receive services or benefits under [Medicare].” 42 U. S. C. §1395hh(a)(2).

Our case involves a dispute over this language. Since Medicare’s creation and under what’s called “Medicare Part A,” the federal government has paid hospitals directly for providing covered patient care. To ensure hospitals have the resources and incentive to serve low-income patients, the government has also long offered additional payments to institutions that serve a “disproportionate number” of such persons. §1395ww(d)(5)(F)(i)(I). These payments are calculated in part using a hospital’s so-called “Medicare fraction,” which asks how much of the care the hospital provided to Medicare patients in a given year was provided to low-income Medicare patients. The fraction’s denominator is the time the hospital spent caring for patients who were “entitled to benefits under” Medicare Part A. The numerator is the time the hospital spent caring for Part-A-entitled patients who were also entitled to income support payments under the Social Security Act. §1395ww(d)(5)(F)(vi)(I). The bigger the fraction, the bigger the payment.

Calculating Medicare fractions got more complicated in 1997. That year, Congress created “Medicare Part C,” sometimes referred to as Medicare Advantage. Under Part C, beneficiaries may choose to have the government pay their private insurance premiums rather than pay for their hospital care directly. This development led to the question whether Part C patients should be counted as “entitled to benefits under” Part A when calculating a hospital’s Medicare fraction. The question is important as a practical matter because Part C enrollees, we’re told, tend to be wealthier than patients who opt for