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Becerra v. Empire Health Foundation

Oral argument transcript · No. 20-1312 · October Term 2021 · argued November 29, 2021 · the petitioner won

Decision: votes, opinion and citations · Official transcript (PDF) · Argument audio at the Supreme Court

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From the Court's official transcript; speaker labels as in the transcript, with advocates' full names from its list of appearances.

Chief Justice Roberts: We'll hear argument this morning in Case 20-1312, Becerra versus Empire Health Fund. Mr. Bond. ORAL ARGUMENT OF JONATHAN C. BOND ON BEHALF OF THE PETITIONER

Jonathan C. Bond: Mr. Chief Justice, and may it please the Court: The Medicare fraction directs HHS to count patient days of patients who, for such days, were entitled to benefits under Part A of Medicare. The question here is which patients are entitled to Part A benefits. Section 426 states that every individual who satisfies certain requirements shall be eligible -- or shall -- shall be entitled to Part A benefits, and that provision and others make clear that the entitlement is not absolute but subject to conditions, and it is not negated merely because Medicare does not pay for particular units of care. That is the best reading of the statute's text, context, and its Official 1 population-focused design, and, at a minimum, a reasonable reading that deserves deference. The court of appeals and Respondent's contrary reading rests on two inferences based on other language concerning other programs. The court of appeals inferred from Congress's references to "persons eligible for Medicaid" that in the Medicare fraction Congress must have meant "entitled to Part A" to mean something different than it means throughout the statute. But Congress's use of "entitled" and "eligible" is fully explained by its usage of those terms in the underlying Medicare and Medicaid programs governed by separate statutory frameworks. Congress simply took those terms as it found them. Respondent contends that the agency's approach to SSI benefits conflicts with its position here. That is not correct, as the agency explained in the 2010 regulation and as the Sixth Circuit explained in Metro Hospital. But even if there were a conflict, the solution is not to skew the meaning of "entitled to benefits under Part A." The Court should give that phrase the meaning that Congress did Official 1 in the statute and reserve the SSI benefits issue for a future case. I welcome the Court's questions.

Justice Thomas: Mr. Bond, before we get bogged down in this indecipherable language, what does -- what's the difference between "entitled to" and "eligible for"?

Jonathan C. Bond: So, in the context of these programs, they --

Justice Thomas: No, no, no. Just in ordinary meaning.

Jonathan C. Bond: So, in ordinary language, I think "entitled" refers to having a right to something, but that something may itself be subject to conditions. It does not signify an absolute right. The district court, at Petition Appendix 42a, pointed to dictionary definitions that go in both directions, and I think that's consistent with ordinary usage, as our season ticket holder example explains. Now, in ordinary usage, "eligible" more naturally means that someone qualifies for something, which is one of the definitions of "entitled" in the dictionaries the district Official 1 court identified. But whatever the ordinary meanings of those terms, I think it's clear how Congress used them in this particular setting with respect to "entitled" in Part A. You know who is entitled from Section 426 --

Justice Thomas: So how far can we go with that if there's no definition of "entitled" in the statute? Can we redefine it simply by looking at how it's used throughout the statute?

Jonathan C. Bond: So, to be clear, our argument is not how it's used. We think there is what functions as a definition both of who is entitled and what that entitlement means. Now those provisions are at 426(a) and (b), which answers the question who is entitled. It says every individual in these categories shall be entitled. And then it says in 426(c)(1) and 1395d what that entitlement consists of, and it says that that entitlement is a right to have payment made for certain services but subject to conditions set forth in the statute. So the statute is telling you that entitlement here does not mean an absolute Official 1 right. And I think that's clarified further by Section 1395l, which refers in two places to a person who is entitled to benefits under Part A but has exhausted them, showing that exhaustion and entitlement can coexist and further distinguishes that person from one who is not entitled to Part A benefits at all.

Justice Kavanaugh: But, Mr. Bond, you are interpreting the word "entitled" to mean something different in the same sentence, different with respect to Medicare and SSI. So that's problem one. Then you're interpreting the word "entitled" actually to mean the same thing as "eligible," Justice Thomas's question, even though they are different words and should, therefore, convey different meanings. So that's problem two. And then the phrase "for such days," as I analyze this, becomes surplusage. Then we look at the history of this, and for the first 20 years, you interpreted "eligible for Medicaid" to mean entitled, and the courts all said, well, you can't do that; "eligible" is something different from "entitled." So you correct that by saying: Oh, Official 1 we can't interpret "eligible" to mean "entitled," so we're going to interpret "entitled" to mean "eligible" in the Medicare fraction. Okay? So that's problem four. And then, in the -- in the administrative process -- and I know you're just the lawyer. In the administrative process, HHS mis-describes the existing rule and the proposal, corrects it a week before the comment period closes, and finally changes the -- the -- the final rule from what it had -- what it had been. So that's problem five. We've -- we've whacked agency rules for much less than that. I know that's not the issue presented, but it is an atmospheric here. So there's just kind of a panoply of problems here. And that's -- that's -- you know, that's more of a comment for you to figure out how to respond to. That's a lot of problems.

Jonathan C. Bond: Sure. If I may respond to those in turn, starting with the use of "entitled" in the Medicare fraction referring both to entitled to SSI benefits and Part A benefits. Our interpretation of that term is consistent in that we read it to mean a person Official 1 who is entitled by the statute that's being referenced. Those statutes, as the Sixth Circuit and the 2010 regulation explained, use "entitled" differently. In the Medicare statute, a person who satisfies these criteria is entitled by operation of law, as the D.C. Circuit in Hall versus Sebelius explained. That's not how it works under SSI. The entitlement does not arise automatically. There must also be an application and a determination.

Justice Kavanaugh: I don't see why that matters, but keep going.

Jonathan C. Bond: Sure. Our -- our -- our point is that we are interpreting the phrase consistently, and that fits with both the nature of the benefits under those two programs and with how Congress is using the terms here. SSI is a cash benefit program, so to say that someone is entitled to that cash benefit more naturally signifies a person who is able to get that benefit. Medicare Part A is hospital insurance coverage, and it is perfectly natural to say that a person is entitled to that coverage even Official 1 though their insurer won't pay for particular units of care, including because a third party was responsible for the injury, and so the third-party insurance must pay for it. And that's one of the issues here. Respondent's theory would say, if the person's injury was caused by a third party whose insurer must pay, that person moves from the Medicare fraction and that population that Congress separately addressed, for at least that patient stay, to the other fraction, and we don't think that's consonant with the statute.

Chief Justice Roberts: Mr. Bond, I think Justice Kavanaugh left out problem six, which is that there's a backstory to all this, and that was that Congress was, I would say, extremely frustrated with what the agency was doing over time. Several times they tried to tighten the statutory language to push it, I would say, fairly, say, in a direction contrary to what the agency wanted. So it strikes me as a situation where I think we ought to be particularly precise in interpreting the language Congress used without any gloss added by the agency. Official

Jonathan C. Bond: So, if I can address that history in turn before returning to the rest of Justice Kavanaugh's question, I think the history is more complicated and nuanced than is sometimes described, and I'd like to walk through it in a bit of detail, but I think the through line is that the agency is not flouting Congress but responding in good faith under the circumstances to actions by Congress and judicial decisions. I think that the relevant history starts in 1983 in the statute that created the prospective payment program. In that statute, Congress did tell HHS to adopt adjustments, including for low-income patients, but what it said was as the Secretary deems appropriate. And the agency determined after looking at the data that it didn't think an adjustment was appropriate. That's reflected in a series of Federal Register rulemakings that are cited collectively at JA 39 to 40. So the agency made that initial determination. Now, at that point, you're right, Congress disagreed and said, no, you really must adopt a definition, and it gave the agency a Official 1 very short deadline that the agency didn't meet. But, when a court ordered the agency to meet another deadline, the agency complied. All of that was overtaken by the 1986 definition that Congress adopted. Now the agency did interpret that for the first decade or so not to include patient days that were not paid for, i.e., covered by the Medicaid or Medicare programs, and Congress did not step in to correct that. But four courts of appeals did reject that interpretation in the context of the Medicaid fraction, and the agency responded by acquiescing to those courts' decisions, and it then carried over that interpretation to the Medicare context.

Justice Gorsuch: Mr. Bond, in -- in that history, what -- what's helpful to the government?

Jonathan C. Bond: What's helpful is --

Justice Gorsuch: I mean, I've heard a lot -- a lot of detail, but the through line doesn't seem to be an effort to fully vindicate the -- the terms of the statute. It seems like at each step of the way there's some -- some Official 1 foot-dragging that's at issue.

Jonathan C. Bond: There -- there may have been inefficiency or misunderstanding of Congress's direction, but I think that's fundamentally different than the agency trying to flout the directive.

Justice Gorsuch: No, fair enough. I -- I -- I don't mean to cast aspersions on intentions, just -- just the facts on the ground are mistakes and -- and -- and mistaking Congress's intention repeatedly. Is that -- is that a fair through line of this?

Jonathan C. Bond: I think there are several occasions of mistaking what Congress clarified was its intention. And I think what Congress -- or what the agency did in 2004 was carry over the approach that it understood from the courts of appeals was appropriate in approaching --

Justice Sotomayor: Counsel --

Jonathan C. Bond: -- the Medicaid fraction to the Medicare fraction to focus not on which patient days are paid for by a program but whether a person satisfies the definition of the term Congress used, "eligible" as opposed to "entitled." Official

Justice Sotomayor: Counsel, how do you -- or do we give you any Chevron deference for this interpretation? Are you relying on that at all, or are you taking the position that this is what the statute plainly says even though, as Justice Kavanaugh pointed out, that's subject to a great deal of dispute?

Jonathan C. Bond: What we're saying is two things. We think we have the better reading writing on a clean slate and, at a minimum, a reasonable reading. I think what we're saying is what the --

Justice Sotomayor: Answer my question. Do you think you're entitled to Chevron deference?

Jonathan C. Bond: We do think we are entitled to Chevron deference.

Justice Sotomayor: So how do you get past Encino Motorcars given the odd flip-flopping in the administrative process? It first misstated its existing policy in 2003. You correct the misstatement at the end of the rulemaking process in 2004. But what's most significant to me, the final rule did the opposite of what the agency initially proposed Official 1 to do. So there's sort of three steps, all of them at the end of an agency process. I don't see how we give you Chevron deference under those circumstances.

Jonathan C. Bond: I would say several things, first about Encino and then about the particular rulemaking history here. Encino does not hold that a procedural error of any kind results in a lack of Chevron deference. I think that the error at issue there was fundamental. The agency had engendered substantial reliance interests that it did not address. That's not at issue here. Moreover, the procedural error that -- that is asserted was rejected by the Ninth Circuit, and this Court declined to review that determination.

Justice Sotomayor: What does that have to do with anything? Whether there's an administrative failing under the APA is a different question than are you entitled to deference for an interpretation that it took you until the end of the process to fix and then, when you fix it, you do the opposite of what you Official 1 said you were going to do?

Jonathan C. Bond: So, on those points, deference goes to the final rule, the final decision-making made by the agency, not to its earlier statement. So deference hinges on what the final rule said. Now, to your point about the gap between the final rule and the proposal, the proposed rule put a binary choice to commenters -- and these are sophisticated providers -- between counting these days in the Medicaid fraction, as the agency proposed and as Respondent now argues, and including them in the Medicare fraction, which the agency mistakenly described as its existing policy, but those two options were on the table for commenters.

Justice Sotomayor: Can you point to any other statute -- you said you have the better reading -- where Congress uses words that have three meanings, the same words that have three meanings?

Jonathan C. Bond: I don't --

Justice Sotomayor: Because that's what basically you're saying, which is "entitled to" is different in -- from "eligible for," and Official 1 it's different for what we're going to do to SSI.

Jonathan C. Bond: So we -- we don't have a statute that gives the same terms three meanings, and that's not what we're saying here. We are saying that "entitled" and "eligible" have similar meanings in practice because the underlying statutes use those two different terms to refer to similar ideas.

Justice Sotomayor: Is it fatal for your argument if they don't use similar terms throughout?

Jonathan C. Bond: No, it's not fatal to our argument, but --

Justice Sotomayor: Meaning that the statutes don't use "eligible" or "entitled" --

Jonathan C. Bond: Well --

Justice Sotomayor: -- consistently throughout.

Jonathan C. Bond: -- the Medicaid statute does consistently use "entitled or "eligible" for Medicaid assistance to describe the category of individuals that are covered.

Justice Sotomayor: But the Medicare statute doesn't? Official

Jonathan C. Bond: The Medicare statute refers to "entitled to Part A benefits" to describe this category of persons.

Justice Sotomayor: Only because you're saying it does, but the Act itself doesn't use "entitled" throughout. It uses "entitled" sometimes and "eligible" other times.

Jonathan C. Bond: When it uses "eligible," however, Your Honor, I think it's referring to something different. In Parts B, C, and D -- and these provisions are cited in our brief -- Congress refers to a person who is eligible to enroll in those programs if they are entitled to benefits under Part A, and when that person enrolls in that program, they then become entitled to that opt-in program.

Justice Alito: Mr. Bond, could you say something about what the Medicare fraction is designed to do? Which of the two interpretations fits that best? I assume you will say yours, and, if that is so, why?

Jonathan C. Bond: The Medicare fraction and the -- combined with the Medicaid fraction are designed as proxies for the percentage of low-income patients a patient has because Official 1 Congress, as this Court has explained, thought that hospitals that serve a greater number of low-income patients will necessarily have higher costs. Now these are --

Justice Kagan: Well, I think everybody agrees with that, Mr. Bond. I -- I had the same question as Justice Alito. I mean, each of your formulas excludes certain categories of people who would generally be thought to be low-income, and the question is, how is it that your formula better reflects that purpose from Congress than -- than the Respondent's formula?

Jonathan C. Bond: So two points. The first is that Congress went about this in a bifurcated way looking at two different populations. Now, if you take that premise, which I think is clear from the face of the statute, our approach is much more sensible because it divides those populations based on their status as a Medicare beneficiary. That's why it's in the numerator and the denominator of the Medicare fraction. Official 1 Whereas, on Respondent's view, which population you're in turns on the happenstance of who ultimately paid for your care. Now, to the point of persons excluded versus not excluded under the different readings, I think that illustrates the same illogic of Respondent's approach. So it's true that on our view, a person who is entitled to SSI and -- or, I'm sorry, a person who is not entitled to SSI but is entitled to Medicaid and is a Medicare patient doesn't count in either fraction. We think that follows directly from Congress's choice to make for Medicare participants SSI the exclusive proxy. But Respondent's reading doesn't add back that category of dual eligible patients who don't qualify for SSI unless they happen not to have had Medicare pay for their care. So you could have two beneficiaries who are equally low-income, and, on Respondent's view, one is added to the Medicaid fraction and one is not based on the fact that one was hit by a third party in a car accident, and, for that reason, Medicare did not cover their care. Official

Justice Kagan: Why is it that the denominators of the two parts are different? You know, if I understand your theory, it's essentially that the Medicare fraction is meant to deal with one population, the senior population, and the Medicaid formula is meant to deal with non-seniors, and that makes some sense. But then why wouldn't the Congress have used the same denominator in both?

Jonathan C. Bond: So Congress didn't explain its use of those different denominators. We know from the conference report that it's a compromise between approaches that did those different things. Medicare patients are low-income Medicare patients among all Medicare patients and low-income measured by Medicaid against all. Congress fused those two different measures not in a way that you add together the patients but that you effectively average out those two proxy measures that examine different parts of the population. And Congress may have determined that both of these approaches have some value and some merit and we should combine them, and the Official 1 one adjustment that it made was taking Medicare patients out of the numerator of the Medicaid fraction to avoid double-counting them.

Justice Barrett: Mr. Bond, I have a question about the difference between SSI and Medicare Part A and the use of the word "entitled." If I understand your argument, you said in response to Justice Kavanaugh that the distinction was that, for Medicare, eligibility or entitlement arises directly by operation of law, whereas, for SSI, it occurs after a determination, correct?

Jonathan C. Bond: That's right.

Justice Barrett: Is that always true for Medicare Part A, however? I mean, I see why it's true for seniors, for people who are over 65. But it's my understanding that for people who are entitled to it based on disability, there did have to be a determination because somebody has to say that, in fact, you're disabled and you qualify.

Jonathan C. Bond: There's a determination of that predicate qualification, but, once you possess that qualification, you are entitled to Medicare Part A benefits. Official 1 You must -- in certain circumstances, you must enroll to access those benefits, but you have a legal entitlement that, as the D.C. Circuit recognized, cannot even be disclaimed. There's a determination of that underlying disability, and it's --

Justice Barrett: But why is that different? It doesn't arise magically by operation of law if someone is disabled and it's unclear whether the disability qualifies, just in the same way that it doesn't arise magically by operation of law that someone's entitled to SSI. Both depend on a predicate determination.

Jonathan C. Bond: I think the point is not that one is dependent exclusively on a predicate determination and the other is not but that Congress specified which individuals fall into these categories. We understand "entitled to SSI" to mean those persons whom SSA has determined are entitled to SSI benefits, which requires the application and determination. If we are wrong about that and we're undercounting SSI, however, the correct answer is not to skew the meaning of "entitled to benefits under Part A," which Official 1 Congress has said encompasses everyone who satisfies this definition and is not the same as persons who still have benefits that are unexhausted. You should reserve the SSI issue for a case in which it is presented. That issue is being litigated in lower courts right now, including in a case in the District of Columbia.

Justice Alito: Well, if I think that you both have reasonable interpretations, what should we do with the Encino issue? Should we decide it? Do we have to decide it? Should it be just --

Jonathan C. Bond: So, with respect to the Encino issue, if you mean should we accord Chevron deference --

Justice Alito: Right. Right, right.

Jonathan C. Bond: -- to the agency's view, I think you should because the agency did not disrupt reliance interests. And if I can return, you know, to the -- the rulemaking process, the agency put those two options in front of commenters. Commenters did weigh in on those issues. Commenters overwhelmingly favored the substance of the approach that the agency Official 1 ultimately adopted. And so I don't think there's a procedural error of that kind.

Justice Kagan: But wasn't it unclear what the commenters thought they were being asked to comment on? In other words, a commenter who said I approve of the status quo, it was unclear whether that was the real status quo or the status quo as mis-described by the agency?

Jonathan C. Bond: By and large, the substance of their comments are not about what the agency was already doing. They refer to the agency's proposal as a change because that's how the agency had framed it.

Justice Breyer: So --

Jonathan C. Bond: But their arguments went to the substance of the two proposals. The Federation of American Hospitals, one of Respondent's own amici, said that the agency lacked statutory authority to do what Respondent is now urging. That would not turn on which approach the agency was already adopting.

Justice Breyer: So you had to really read all those comments in 2003.

Jonathan C. Bond: That's right, and -- Official

Justice Breyer: Well, that's quite a job. I mean, do I understand this correctly? And the chances I understand it correctly are near zero, okay? Now just follow this and see if I understand it. There are two fractions, call them Fraction 1 and Fraction 2, Medicare and the Medicaid, okay, or the Medicare and -- and Medicaid over Medicare and SSI over Medicare. Okay. Fraction 1, Fraction 2. And there are a few people who have Medicare. There are some people who have Medicare, but there are benefits Medicare won't pay, and it might not pay because, in fact, there's somebody else to pay or it might not pay because they used up all they had on Medicare, okay, so they won't pay. Now what do we do with those people? Do we put them in 1, or do we put them in the denominator of 2 somehow? Okay? That's the issue. And so let's call them people who've exhausted their benefits. So these people are exhausted, just like me after reading this case, okay? (Laughter.)

Justice Breyer: We're exhausted. And Official 1 now what do we do with the exhausted people? And the fact is, in 2003, not even the agency knew what they were doing with the people. They wrote down that we are -- put all these people, I think, in 1, but they hadn't. They actually put them in 2. Or maybe it's vice versa. But I think I got it right. So now they say, what shall we do? They say let's put them in 2. By now, it's 2008. And after they read the comments, they say: No, we're going to put them in 2000 -- we're going to put them in 1. Now, if I'm right so far, the exhausted people are now in this rule over in 1. And that's where I am, exhausted, okay? So that's where they are. Do you know how many people understood this from 2003 on? Two. Two commenters out of God knows how many actually understood it. So, if I were in Congress and I had this issue in front of me, you know what I would say? Let the agency do what it wants as long as it's reasonable because I have no idea. And so my question is, how are we expected, nine people, when only two people in the United Official 1 States in 2003 understood it in the way of comments, how are we supposed to decide who's right? I mean, if it were so obvious, it wouldn't have taken 27 years -- or 17 years to get to this point.

Jonathan C. Bond: To pick up on that last point, the fact that Congress has not intervened in the 17 years since the final rulemaking, I think, tells you that Congress did not think the agency had strayed and did not disagree with the agency's approach. And it's not because Congress wasn't watching. As we note in the reply, Congress specifically intervened to approve the agency's Medicaid regulations relating to demonstration projects and yet left its approach to this issue unaltered. Now, to the substance of your question, the exhausted patients belong in Fraction 1 because their exhaustion of certain items of care does not transform them into non-Medicare patients, and they can still get other Medicaid -- Medicare Part A benefits even if they've exhausted their inpatient care. But, to the extent that the Court Official 1 thinks that question is unclear, that's a quintessential question for the agency.

Chief Justice Roberts: Thank you, counsel. Justice Thomas, anything further?

Justice Thomas: I have nothing further, Chief.

Chief Justice Roberts: Justice Breyer? Exhausted? (Laughter.)

Justice Breyer: Yes.

Chief Justice Roberts: Justice Alito? Justice Gorsuch, anything further?

Justice Gorsuch: What do we do about the fact that, as in this case, Chevron is very often asserted by the government to defend an interpretation that not only few people were given any advance notice of or understood, or maybe they were too exhausted to understand by the time it all was adopted, but also it tends to favor the government's own pecuniary interests? Should we be granting deference in those circumstances?

Jonathan C. Bond: I don't think a carveout to deference based on which way the needle goes in Official 1 terms of the federal government's expenditures are not --

Justice Gorsuch: We normally -- you know, you -- you normally take into account when you're interpreting a document who writes it and their pecuniary interests. Why would this be different?

Jonathan C. Bond: Well, I think, in this particular instance, the fact that the overwhelming majority of commenters said that counting these patients in Fraction 1, the Medicare fraction, was better for them than counting them in the other and that the agency said it's going to depend on the hospital, we are not making a decision either way, but even adopted the -- the approach that the commenters, the sophisticated providers, preferred, I think, undercuts any inference that the agency here was trying to undermine payments. Everyone agrees the goal is to increase payments. The question here is by precisely how much for precisely which providers the agency provides billions of dollars a year, and the question is exactly how much more it must provide to certain providers. Official

Chief Justice Roberts: Justice Kavanaugh?

Justice Kavanaugh: To pick up on the Chief Justice's earlier question and Justice Gorsuch's question about the through line, it seems from a 30,000-foot level that the through line is the agency wanting to spend as little as possible on this program because entitlement spending, mandatory spending, is a huge part of the federal budget, and the agency, especially in 2003, '4, '5, the new prescription drug benefit had just come in, which was going to be a huge new expenditure for the government, and so the government, the administration at that time, was looking for places to restrain the growth or cut, in government speak, spending. And that's the through line going all the way back, as the Chief Justice says, to the -- the beginning. And you -- you do it by interpreting "eligible" to mean "entitled" to begin with and then interpreting "entitled" to mean "eligible." So why, when we look at the whole picture, is that wrong to see? And it's not -- it's a laudatory motive, but the question, is Official 1 the statutory language getting in the way? Why shouldn't we see the through line as the government wanting to be stingy in its payout of these benefits?

Jonathan C. Bond: Because I don't think that tracks what the agency said at each of those times. In 1984, it said we looked at the data and don't think an adjustment is warranted. Subsequently, after the 1986 statute, it looked at the statute and thought based on the legislative history and the language that Congress didn't intend to -- to include non-covered persons. But four courts of appeals rejected that. So the agency is responding as those events unfold. But I think, at a broader level, the -- the answer to the question which interpretation is best can't be answered by broad-brush statements of congressional purpose to increase payments, especially given the highly reticulated calculation set forth at 18a to 25 of our appendix, where Congress laid out all these detailed things. So it's not the agency trying to skew the calculus one way any more than it's Congress Official 1 trying to maximize payments. Indeed, the -- in the Affordable Care Act, Congress reduced the amount of these payments.

Justice Kavanaugh: One final question. Do you agree, though, that the agency's approach from the mid-'80s through those four courts of appeals was to lower payments beyond -- compared to what it would have otherwise been, and then its approach, starting in '03, '04, '05, similarly was to lower payments compared to what it otherwise would have been?

Jonathan C. Bond: So we're not in a position to dispute that it generally had that effect. We don't in the ordinary course calculate the -- the effects on individual hospitals because the agency calculates the Medicare fraction, but the remainder of the equation is calculated by the contractors.

Justice Kavanaugh: You say you're not in a position to dispute. It's -- it's almost impossible to dispute, isn't it? I mean, your -- the letter you sent in and the -- and the stats in your brief, I just --

Jonathan C. Bond: And what that letter Official 1 reflects is that for hospitals in the Ninth Circuit, for most, but not all, the Medicare fraction would go up. Now the numbers that we provided do not translate directly into payments. But, yes, the general tendency is, if you have a higher Medicare fraction, there may be a higher payment at the end of the process. That amount is probably going to be small. The median and mean, as we note in the letter, are really quite modest, and it still depends on the hospital's population. And that, I think, is the Agency's approach.

Justice Kavanaugh: Thank you.

Chief Justice Roberts: Justice Barrett? Thank you, counsel. Mr. Hettich. ORAL ARGUMENT DANIEL J. HETTICH ON BEHALF OF THE RESPONDENT

Daniel J. Hettich: Mr. Chief Justice, and may it please the Court: In the face of HHS's recalcitrance, Congress gave HHS detailed instructions to ensure that hospitals that treat a disproportionate share of indigent patients are Official 1 properly reimbursed. HHS has repeatedly violated those clear instructions and has done so again here. In this case, HHS has concluded that inpatients are entitled to benefits under Part A for days on which they're entitled to no Part A benefits, no inpatient benefits because those benefits have been exhausted, and no other benefits because all other Part A benefits are incompatible with being a hospital inpatient who requires discharge. That interpretation is impermissible. First, the agency's position violates the plain meaning of the statute. As Justice Kavanaugh pointed out, the agency reads the statutory terms "entitled" and "eligible" to mean the same thing. That is both inconsistent with the ordinary meaning of "entitled" and contrary to how the agency interprets "entitled" in the same sentence of the statute. The agency claims that the ordinary meaning of "entitled" doesn't matter because 426, according to the agency, controls and -- and explains what Congress mean -- means by "entitled to benefits under Part A." But that's Official 1 wrong. 426 is not a definitional provision, and, in any event, it addresses a different issue. Second, the agency's interpretation is unreasonable. HHS's rule provided almost no justification for its repudiation of an interpretation that it held for over two decades. Most fundamentally, despite interpreting a statute governing DSH payments, it didn't even assess what impact its interpretation would have on DSH payments. We now know 15 years later that the effect is to reduce the Medicare fraction over 80 percent of the time. Since the agency's own interpretation can only also reduce the Medicaid fraction, it can never increase it, this means that the agency has once again categorically excluded indigent patients, in violation of Congress -- Congress's clear instructions. Unless there are questions from this Court, I'll begin with the statute's plain language.

Justice Thomas: Just one quick Official 1 question. The -- there are other provisions that are hinge -- that hinge on whether or not someone is entitled to benefits under A. But, if you limit it as you -- entitlement -- as you want, as you suggest, what do you do with those entitled -- with the enrolling under C or D, or -- or what do you do also with the conflict the government pointed out with 1395l that seems to suggest that you can both exhaust and still be entitled to benefits?

Daniel J. Hettich: Your Honor, the -- we think it's possible for statutes to ask different questions, and -- and there is a distinction between asking whether a patient is generally entitled to Medicare benefits or are they a Medicare beneficiary generally, and we think those other statutes ask that question. But that's not the question the DSH statute asks. And the proof is that the DSH statute specifically qualifies "entitled to benefits for such days." So the question the DSH statute --

Justice Kagan: Well, but then you are suggesting that the interpretation of this provision would be out of kilter with other Official 1 provisions in the Medicare statute, and you would be relying just on the parenthetical "for such days." So, as much as we can, you know, say to the government, well, you're saying "entitled" means two different things, I mean, you have an equal or greater problem, which is that you are interpreting this phrase in a way that's very much not the way we would interpret this phrase in the rest of the Medicare statute.

Daniel J. Hettich: Your Honor, I -- I think the key distinction is -- is the "for such days." And, tellingly, that language does not appear in any of these other provisions that the Secretary cites, right? It doesn't say, if you're entitled to Medicare for such days or for any particular days, then you can enroll in Part B. It says, if you're generally entitled to benefits under Part A, full stop, or if you're a Medicare beneficiary generally. And we agree, Your Honor, that these patients are still Medicare beneficiaries generally. As the Secretary points out, there are benefits they could access once they are discharged, not as hospital inpatients. They Official 1 can't get skilled nursing benefits while they're an inpatient or home health benefits at a hospital. So they're still Medicare beneficiaries generally. But, again, that's not the question that the DSH statute asks because it has language that's not found anywhere else, and that --

Justice Kagan: Well, but that language might mean what you think it means, or it might mean something entirely different. I mean, you say that the government's reading turns that language into a superfluity, but it's not. That language continues to perform a very important function and a function that Congress might well have thought about when it was drafting this statute, which was, oh, we have to deal with the people who turn 65 during their hospital stays. I mean, that's not an inconsiderable number of people. This is a gigantic program. People turn 65 every day. It would make complete sense for the drafters of the statute to say: You know, we have to put in something about, like, prorating it for the people who turn 65 in the middle. Official

Daniel J. Hettich: Your Honor, it's -- it's not just that "for such days" would do very little work and this Court has rejected --

Justice Kagan: I mean, that's a lot of work. A lot of people turn 65 during, you know, every day in this country.

Daniel J. Hettich: Right. I -- I don't know how many do it while they're hospital inpatients, but -- but -- but there's a more fundamental point in that that language would be completely unnecessary because, remember, the unit of measurement here is days. And so, according to the Secretary, what "for such days" does is tell HHS you cannot treat a day as being entitled -- a specific day as being entitled to benefits under Part A until the patient has met the bare minimum for Medicare eligibility requirements. Well, no rational person would treat days as being entitled to benefits under Part A before the beneficiary had met the Medicare eligibility requirements. And, in fact, Your Honor, the same thing holds true for the Part B enrollment and the Part C enrollment and the Part D, right, Official 1 where no one would allow a person that had not yet met the basic Medicare eligibility requirements to enroll in Part B. And yet "for such days" doesn't appear in any of those languages, and HHS isn't allowing folks to enroll in Part B before they've met the general Medicare eligibility requirements because it's obvious. So it's not just that it would have very little work, but the work it does, the "for such days" under the Secretary's interpretation, is completely unnecessary.

Chief Justice Roberts: You will agree, won't you, that in the abstract, in particular contexts, that "entitled" and "eligible" -- "entitled to" and "eligible for" can be used as synonyms? It's basically Mr. Bond's point that "entitled to" does mean, conceding it, I guess, for purposes of argument, that you have a right to something, but the question is a right to what? If I say that, okay, I'm 65, I'm entitled to Medicare benefits, that's true. I'm entitled to Medicare benefits if this, this, and Official 1 this are satisfied, which would be the same thing as saying I'm eligible for those benefits if I meet those criteria.

Daniel J. Hettich: Your Honor, I -- I think, in some cases and -- and speaking loosely, occasionally those terms could be used synonymously. I think, when they're juxtaposed as they are here, two different words in the same sentence, because it talks about folks that are entitled to benefits under Part A and eligible for -- for Medicaid, when those words are juxtaposed in the same sentence, then we have to actually look at what's the distinction between those two words. We're not looking for the commonality because Congress chose two different words.

Justice Kagan: Well, but the distinction is that the statutes are different and that the statutes use those two words differently. And the government essentially picked up the "entitled to" from the Medicare statute, where it consistently functions in the way the government suggests, and the Medicaid statute uses a different vocabulary. And the Medicare statute uses a Official 1 vocabulary that, as the Chief Justice says, is very consistent with ordinary meaning. Ask any 65-year-old are you entitled to Medicare, and the answer is going to be yes. And it's really not going to matter whether they've exhausted their 90 days of coverage.

Daniel J. Hettich: Your Honor, I think, if you ask any ordinary person that has exhausted their Medicare benefits and that Medicare is not paying a penny for and that, if they're lucky, Medicaid maybe is picking up the tab, if you ask them are you entitled to Medicare benefits for these days, for these days after you've exhausted, I think most folks would say no, I'm entitled to no benefits now --

Justice Breyer: Yeah, but -- but --

Daniel J. Hettich: -- I've exhausted them.

Justice Breyer: -- but that isn't what the statute says. The statute says "entitled to benefits under Part A of Medicare."

Daniel J. Hettich: Uh-huh.

Justice Breyer: Let's try it out, ordinary language. Math class, high school teacher has a list of special rewards. Part A says ice cream, ice cream but no more than two a Official 1 week. So the kids use two a week. Huh? Yeah, but he fits -- he needs the reward, he deserves the reward. He's entitled -- he's entitled to ice cream under Part A. He fits within it. Ahh, but he's not eligible for ice cream now because he's already had his two for the week. So I read that and try and put it in my ordinary English ice cream high school mind, and there we are. And -- and I have a ordinary meaning that seems to me closer by that much to what the government says than what you say. So suppose I believe that. Next question: Chevron. Okay? Gee, do you really apply Chevron where they're so mixed up that there are only two people in the United States when they -- when they put out the -- the notice and comment and nobody understands what it means and they don't even know what their own program is? Hmm. Huh, I'm stuck. All right. What do I do?

Daniel J. Hettich: So two quick points, Your Honor. On the ice cream example, I think, if you asked that student that had used up his two ice cream cones on Wednesday, and you ask him on Friday are you entitled to ice cream Official 1 today for -- for such day, for this Friday, he'd say no, I used it up, I wasn't --

Justice Breyer: But it doesn't say --

Daniel J. Hettich: -- I was that day --

Justice Breyer: -- for this Friday. It says "under Part A." And if you ask him are you entitled to ice cream under Reward Announcement Part A, he would say, well, yeah, I just don't get it now because I used them up.

Daniel J. Hettich: Okay. Well, I --

Justice Breyer: No, not so far.

Daniel J. Hettich: -- I respectfully disagree, Your Honor, but -- but to -- to your Chevron question, I think there are actually two problems. The Chief Justice pointed out one of them, which is that the premises for Chevron deference simply -- the primary one, which is that there was an implicit delegation from Congress, which was what Mead and Epic said, simply does not exist here. Congress may have started off giving the agency broad discretion in -- in 1983 where it said go make an adjustment. After the agency refused and refused, as Mr. Chief Justice pointed out, the Congress got more and more Official 1 prescriptive, until it came up with a very detailed, you know, unusually detailed, provision that was meant to cabin -- that was meant to tie the agency's hands and force the agency to act. And so we think, in this context, presuming that there was an implicit delegation of -- of authority is -- is unfound -- is belied by the record. And it turns out Congress had good reason to be wary of giving the agency discretion because, even under those clear instructions, the agency repeatedly violated the clear instructions, as the amici for certain hospitals and health systems pointed out. But, as a second problem --

Justice Alito: Well, you -- you and Mr. Bond have both said a lot about what Congress intended, but do you really think that a majority of the Senate and a majority of the House thought through the particular question that faces us in this case and they all said, yes, your interpretation is the right interpretation, that's what we want? Do you seriously want to make that argument?

Daniel J. Hettich: Your Honor, I -- we Official 1 think the language speaks for itself, and -- and it's quite -- quite prescriptive, and Congress went out of its way in the statutory language -- you can just focus there -- to -- to define what universe of patients would be subject to that stricter "entitled to SSI" standard, and that universe of patients were hospital patients who, for such days, were entitled to benefits under Part A.

Justice Alito: Well, could you -- I -- I -- I understand your argument, and -- and there's a lot of force to it, but could you compare what a person has to do upon turning 65 in order to get Medicare Part A with what a person has to do in order to get Medicaid -- I'm sorry, in order to get SSI?

Daniel J. Hettich: Your Honor, so I think there's a fundamental point that I want to make on the SSI that, both in its briefing and in oral argument today, I think there could be a misimpression that the Secretary only excludes SSI-eligible folks who haven't applied for SSI. And that's the distinction, what you need to apply. On the contrary, though, HHS excludes Official 1 large numbers of patients that have applied for SSI, been determined eligible for SSI, and simply did not receive their SSI benefits --

Justice Alito: Well, the point is --

Daniel J. Hettich: -- for a determined --

Justice Alito: -- how many -- how many hurdles do you have to clear upon turning 65 in order to get Medicare Part A and how many hurdles do you have to clear in order to get SSI? My impression is that you don't have to do very much to get Medicare Part A, and you have to do more to get SSI. Is that wrong?

Daniel J. Hettich: It -- it -- it's not complete, Your Honor, I think, for two reasons. As Justice Barrett pointed out, there are categories of Medicare beneficiaries that need to apply if -- if they -- based on age, if they're disabled, et cetera. Even for those who are 65, it's if they also get their Social Security retirement benefits, which requires an application, you have to ask, and you can determine when you ask for the Social Security. So the difference isn't that great between the two. But -- but -- but, more -- more Official 1 fundamentally, Your Honor, again, going back to -- to my point a moment ago, even if -- even if folks -- even if patients have applied and been determined eligible for SSI, the Secretary will still exclude them even though they've applied and have met all the statutory -- simply because they don't receive the benefit. We cite in our briefs patients that refuse direct deposit or whose checks were returned as undeliverable. Those folks are excluded. Clearly, they applied for SSI. They're trying to send them their SSI checks.

Justice Kavanaugh: Can I -- keep going.

Daniel J. Hettich: Well, I was just -- I was just going to conclude, Your Honor, these folks are being excluded not because they didn't apply but because they simply did not receive their SSI cash for some reason.

Justice Kavanaugh: I want to go back to Justice Alito's question about Congress in the 1980s, and my understanding -- correct me if I'm wrong -- is that these -- the two committees involved were House Ways and Means and Senate Finance, which were deeply involved in the Official 1 particulars of these programs, two of the most expert staffs in the Congress then and now, and were deeply involved. And then, secondly -- correct me if I'm wrong -- I mean, there's hospitals in most districts. Congress -- members of Congress, at least in my experience, are pretty attuned to payments to hospitals. But maybe you have a better understanding of this than I do.

Daniel J. Hettich: That -- that's completely correct, Your Honor. I mean, I was focused on the statutory text, but if you look at the legislative -- legislative history, it's remarkably robust. These terms were debated. They -- they evolved, et cetera. And the agency's overall point is that -- is to focus on this concept that Congress meant these fractions to be hermetically sealed, that no patient should move -- no indigent patient should move from one fraction to the other. And, first, there's very little basis for that because, even under the Secretary's interpretation, a patient could move from one to the other. The -- the legislation evolved. At Official 1 some points, the Senate was considering including Medicaid beneficiaries and vice versa. But more to the point, what's clear is that what's important in the legislative history isn't whether an indigent patient might move from one fraction to the other; it's that the indigent patient be counted in the first place. Under the Secretary's interpretation, Justice Kagan, to your question, the practical impact, instead of increasing reimbursement, instead of -- instead of giving hospitals increased DSH payments for treating clearly indigent patients that have exhausted benefits, 80 percent of the time the Secretary's interpretation decreases the hospital's --

Justice Kagan: Yeah, but the purpose here can't be thought to be -- you know, over and over, you say in your brief, well, you know, the -- the purpose is satisfied if hospitals get more money. But that's not right. I mean, Congress put together a formula, and it was a formula for counting low-income patients, and the question is, who has the best reading of that formula? Official 1 And I guess, you know, going back to Justice Alito's question, it does strike me as -- I mean, this -- this formula, there are good arguments on both sides about what this formula means. And, similarly, if you look at the actual populations that are covered or not covered in these two formulas, it's just not clear which one is more reflective of a desire to subsidize hospitals with low-income patients. You know, the question is, you know, how and which low-income patients? So I guess this goes back to Justice Breyer's question, you know, assuming that to -- to us or to me, it doesn't leap off the page which formula -- you know, what this formula means, you know, what should we do about that?

Daniel J. Hettich: Yeah, I -- I -- Your Honor, I -- I don't think you should accord it Chevron deference, and since it's not the best meaning of the statute, I think this Court should -- should overturn it, should say the better reading is -- is giving words their ordinary meaning, distinguishing between "entitled" and "eligible," not a -- not -- rather, equating "entitled" and "entitled" as it Official 1 appears in the SSI and the Medicare fraction. And -- and it's -- it's a good -- I didn't finish my answer to -- I forget which Justice -- about the deference, that there's kind of a second reason why deference isn't warranted, right, not just the lack of implicit delegation under these circumstances but the Encino point, which is that the final rule, you could -- there's a lot to be said about the proposed rule, but we don't even need to go there. If you just look at the final rule itself, there was almost no reasoning given for a change of 20 years of practice affecting many millions of dollars for indigent patients. That's almost exactly what happened in Encino, right? The agency engaged in notice-and-comment rulemaking in Encino, but it had a summary statement that it thought its policy was, you know, a reasonable interpretation of the statute. And this Court said that's not good enough, particularly when you're repudiating prior practice, and that's exactly what -- what -- what went on here.

Justice Kagan: One thing that seems to me attractive about the government's proposal Official 1 is that the government has a sort of simple theory of the -- the two formulas and how they're supposed to work together, in other words, that the two formulas are really meant to address two different populations. One is supposed to address the senior population, and the other is supposed to address the non-senior population. And the formulas were in -- you know, if that's true, that the dual eligible patients are supposed to be reflected in the Medicare formula because they're seniors, and we're not supposed to be doing this in such a way that people are bopping back and forth between the two formulas in -- in both a-hard-to-administer way but also a kind of, like, why-would-that-have-happened way. So the -- the government's theory of what these formulas were meant to do seems a lot more sort of simple and straightforward than yours does to me.

Daniel J. Hettich: Your -- Your Honor, I -- I suppose one fundamental point. By Congress using the term "for such days," again, in -- in its wisdom, it kind of eschewed the idea of Official 1 simple, right, because, I mean, it specifically required an analysis, a day-by-day analysis, precisely what the Secretary --

Justice Kagan: Well, on your theory of --

Daniel J. Hettich: -- said shouldn't --

Justice Kagan: -- what that means, it does, but not on the government's theory of what that means. On the government's theory of what that means, it was just meant to kick out people who pick out -- kick out the days that people were in hospitals before they were 65.

Daniel J. Hettich: Yeah, I -- I -- I think another theory requires a day-by-day analysis. In one case, you know, according to the government's theory, which, as I discussed, makes no sense because there's no reason to tell HHS don't -- don't treat people as entitled to benefits under Part A before they've met the Medicare eligibility criteria.

Justice Kagan: Can you make --

Justice Gorsuch: But, counsel --

Justice Kagan: -- your argument without relying on that parenthetical?

Daniel J. Hettich: Yes, we can, Your Honor, Official 1 because, in either case, even without that paren -- parenthetical, the agency is still equating "entitled" and "eligible," even -- even assigning the same reason, and that's kind of beyond dispute. In the Ninth Circuit, the government contended --

Justice Kagan: Yeah, I guess I would say can you make your argument, back to my question about what these formulas are supposed to do, without relying on that parenthetical? The government, you know, is like this is the senior formula, this is the non-senior formula. That makes a lot of sense.

Daniel J. Hettich: Yeah. Your -- Your Honor, I -- I mean, there -- there's at least one other answer, and I think there's probably more, but it makes sense for Congress to focus on who -- who pays because the payment is different. Medicare generally is going to pay more generously than Medicaid. So it makes some sense for Congress to have said, if Medicare is paying for this patient and you're getting, you know, generally reasonable payment, the more stringent entitled Official 1 to SSI criteria apply. That's where you're actually entitled, not just eligible, for SSI. But, if Medicare isn't paying and you're relying on Medicaid payments, which are generally pretty -- pretty poor, then, in that case, we need a more generous standard to -- to apply, and so you go into the -- the Medicaid fraction.

Justice Gorsuch: Counsel, if I might circle us back to Justice Breyer's question a moment ago, if we -- if we thought this were ambiguous, the statute ambiguous, and -- and you -- your first argument against deference to the government is that this matter wasn't assigned to it because Congress became so prescriptive. Got it. Your second argument, which you call your Encino argument, I think, I might think of it as a Chenery argument if -- if you want to put it in those terms, is, is the government is now relying on different sets of arguments than were in the rulemaking and that -- that -- that should be taken into account before we grant it any kind of deference. I think the government's argument -- Official 1 response to that one, though, was that -- that the deference belongs to the substance regardless of what procedure was used to adopt the rule. What -- what do you say to that, number one? And, number two, moving beyond those two arguments -- you can think of it as Mead and Chenery or Mead and Encino -- do you have a third, or is that it?

Daniel J. Hettich: On -- on the first question, Your Honor, it's -- and it's actually very similar. So there were problems in the procedure itself. And, again, we're willing to put that aside. It's in our brief. I think -- I think it speaks for itself. But, if you look then at -- at the outcome of -- of the rulemaking, so -- so the substance of it, what the agency said to justify its policy, in that case, it's exact -- again, it's on all fours with Encino, where, again, in Encino, I don't think there was an allegation that, you know, as -- as there could be here, that the agency misstated its policy, et cetera. But it was simply the fact that the rationale given was insufficient, was Official 1 unreasonable, to support particularly a radical change in policy. And that applies here too. I -- I agree on the Chenery point. 426 never came up in the rulemaking. The phrase "for such days," which the Secretary says was the whole thing that changed, is interpreting "for such days," doesn't appear anywhere in -- in the rulemaking. The legislative history isn't, you know, cited in the rulemaking. The agency didn't even do an impact analysis on a rule that's --

Justice Kavanaugh: That --

Daniel J. Hettich: -- about payments.

Justice Kavanaugh: That's a third then -- if I'm understanding your answer correctly, that's a third problem, a lack of reasoned explanation. They didn't address particular aspects of the problem.

Daniel J. Hettich: Correct, Your Honor.

Justice Kavanaugh: State Farm maybe.

Daniel J. Hettich: Exactly. Didn't even consider --

Justice Kagan: Counsel --

Justice Breyer: I'm still stuck on what we -- well, what we do. Actually, it's a Official 1 rather pretty difficult case for me. I mean, I think what Justice Gorsuch said is probably right. I mean, I have an awful qualm about using Chevron here because the point of it is supposed to be that a reasonable member of Congress would have wanted the agency to figure this out, and where it figures it out, doesn't figure it out, gets everything mixed up, it's a pretty tough case to use Chevron. Okay. So then what do we do? I mean, if the language slightly goes in their direction, and now we have Justice Kagan's argument, which is probably all created in 2020, 2021, to justify something that was done who knows why in 2008 or 2003, at that point, I am actually baffled. I know you're just going to say decide for us, but that isn't going to help me when you just say that. Can you think of anything else to say?

Daniel J. Hettich: I can, Your Honor. I -- I think, in some ways, this is an -- an easy case, with -- with all due respect, because the Secretary's interpretation, admittedly, the Secretary admits, requires departure from the ordinary meaning of "entitled," requires the Official 1 violation of all sorts of statutory canons, requires equating "entitled" to "eligible," departing from the ordinary meaning of "entitled," rendering "for such days" superfluous. We can -- but -- but we think it clearly does. And all of that is based on its view that 426 controls. But 426 is not a definitional provision. Title II has definitional provisions, and 426 is not among them. The Medicare statute has a definitional provision, and "entitled" isn't -- isn't defined there.

Justice Sotomayor: Counsel?

Daniel J. Hettich: And that's --

Justice Sotomayor: Counsel, doesn't 426(c) help you? I thought 426(a) and (b), which the government is relying on, to equate entitlement with eligibility, I read (c) and it's clearly saying, which is made subject to (a) and (b), (a) and (b) are made subject to (c), it says entitlement of an individual to hospital insurance benefits for a month shall consist of entitlement to have payment made under and subject to limitations in Part A. Official 1 I mean, it's taking away exactly what they claim, that eligibility and entitlement are equated, isn't it?

Daniel J. Hettich: Your -- Your Honor, we agree. And -- and the second point, besides not being a definitional provision, is -- and perhaps more importantly, is the point that, as you just said, 426(c), far from departing from the ordinary meaning of "entitled," specifically links entitlement to payment, as does 1395d, a provision that actually appears in the Medicare statute, that says almost the exact same thing. Entitlement is not -- it's not a badge of honor in Medicare beneficiary. What it is is payment for services. And these patients were entitled to no payment of services for the days that they were hospital patients.

Justice Sotomayor: So is our bottom line, do we reach the better reading? Do -- I'm assuming you're saying Chevron doesn't apply for four or five different reasons. We have to give it the better reading, and the better reading is yours because of all of the reasons Justice Kavanaugh set forth earlier and the additional ones developed, correct? Official

Daniel J. Hettich: Correct.

Justice Sotomayor: Have we left out any other reason why yours is the better reason or the better reading, I'm sorry?

Daniel J. Hettich: Your Honor, I -- I think we covered the bases. Justice Kavanaugh listed the five points. We would agree with those. Chief Justice added -- added the sixth. I think -- I think, among those six, I think we've covered the bases of -- of the reasons.

Justice Kavanaugh: Can I ask how the "for such days" worked in practice in the first two decades? You would go -- someone would go through and say this patient on November 10 received Medicare benefits for that hospital stay. On November 11, they've received Medicare. On November 12, they did not. Is that -- it was done at that granular level, correct?

Daniel J. Hettich: It -- it -- it -- it was, Your Honor. And -- and it was even more simple because, once a patient had exhausted their Part A benefits, they -- they simply were no longer counted. Medicare didn't care. They weren't paying for those -- for those days, so Official 1 they couldn't possibly -- the agency had to create a whole mechanism for tracking these patients after they've exhausted their benefits so that they could begin to add them to the Medicare fraction, because, before that, there wasn't a mechanism because they weren't -- they weren't being paid. Medicare didn't -- didn't care.

Justice Kavanaugh: And one thing -- this is now back to a big-picture question. What -- what's the practical impact of the difference between your two arguments here? I mean, we're sitting here removed from how it's going to affect hospitals that serve poor patients, but is there -- you know, what's -- what's the impact?

Daniel J. Hettich: Yeah, the -- the impact is very significant, Your Honor, particularly on these hospitals, our safety net hospitals. As amici point out, safety net hospitals have much thinner margins than hospitals in general, where a couple of percent -- I know my friend on the other side said, oh, you know, it's just a percent or two. For these hospitals, that can be the difference between keeping their doors Official 1 open or closed. And the study we cite in our brief and amici cite shows that the average impact -- the total impact of this policy is about $150,000. This is back in '05, so updated for inflation and with inflation being what it is, who knows what that number would be today? But even at 150,000 times about a thousand DSH hospitals over 10 years, we're talking about a lot of money for hospitals that -- that really need it. And -- and, Your Honor, it raises a question -- again, I just want to make this clear -- that these hospitals are losing money. It's not -- if you ask -- if you ask the question would their DSH payments increase or decrease by treating these indigent exhausted day patients or stay the same -- three parts -- do their DSH payments increase, decrease, or stay the same, the answer is their DSH payments decrease. They get less DSH payments for treating these patients. And the proof is that it decreases the Medicare fraction, right? By treating these patients, it has no effect on the Medicaid Official 1 fraction. They're already excluded under the Secretary's policy. What does it do to the Medicare fraction? It decreases it. So it leads to a net loss in DSH payments. It's not that they stay the same or they go up and not -- but don't go up as much as we'd like. It's that they actually go down. The agency has turned it on its head. It turned what's supposed to be an incentive, as this Court held in Allina, to treat inpatients and turned it into a disincentive. You'll get less money. We'll reduce your DSH payments for treating these clearly indigent patients. I just wanted to make sure that that was clear.

Chief Justice Roberts: Justice Thomas, anything further?

Justice Thomas: Just one question. Are there -- are inpatient services the only benefits under Part A? Because we've spent -- I think so much of your argument is premised on that being the only benefit and that that benefit would be exhausted.

Daniel J. Hettich: It -- it's the only benefit a hospital -- I mean, a patient can receive while an inpatient. There are other Official 1 benefits that are categorically incompatible with being an inpatient. So, upon discharge, if they met the other criteria, many of these patients aren't discharged, they -- they die in the hospital, unfortunately, but if they were discharged and they -- and they met the other requirements for skilled nursing benefits, Part A would cover that. They might be able to get home health. But, as the name suggests, all of those additional possible potential benefits at another time under different circumstances can -- do not apply while the -- while the patient is an inpatient in the hospital, Your Honor.

Justice Thomas: Well, I understand that, but if we're going to premise, you know, our analysis on exhaustion, it doesn't seem as though the benefits under Part A are exhausted if those benefits are still available.

Daniel J. Hettich: Again, Your Honor -- and because of what the -- the way the DSH statute is structured, right, it says are you entitled to benefits for -- for these days, for these hospital patient days, for such days, and that's clearly focused on while the -- while the Official 1 patient is an inpatient. And while the patient is an inpatient, they are entitled to no Part A benefits. The -- they -- they might be upon discharge, again, in a different time, different circumstance, but, at that moment, for those days, they are entitled to no benefits and receive no benefits under Part A.

Justice Thomas: Well, but if you read "entitled" broadly, they're still entitled to the other benefits whether or not they have applied for them. So, technically, they're still entitled for some -- entitled to some benefits.

Daniel J. Hettich: Your -- Your Honor, we -- I -- I agree, and -- and I think that's the question -- like the Part B enrollment and the Part C enrollment, that's the question those statutes are asking, and they don't include the proviso for such days. They're saying, are you generally a Medicare beneficiary, yes or no? In the DSH statute, unlike all those other provisions, it specifically -- it has a restrictive qualifier that takes a snapshot in time and says right now, on this day, are you entitled to -- to benefits under Part A, and the Official 1 answer is no. Tomorrow, upon discharge, I might be. Today, I'm not. Yesterday, maybe I was.

Justice Thomas: Thank you.

Chief Justice Roberts: Justice Breyer? Justice Alito?

Justice Alito: Well, let me add one -- one more question. Which interpretation best fits the design of what this -- these provisions are supposed to do? And could you just explain why you think yours best fits the -- better fits the design in the simplest possible terms? Why does yours fit better?

Daniel J. Hettich: Your Honor, obviously, the Secretary was for our policy before it was against it for -- so, for 20 years, it held --

Justice Alito: Okay. Well --

Daniel J. Hettich: -- it held the same policy.

Justice Alito: Just the design.

Daniel J. Hettich: Yeah.

Justice Alito: Why does yours better fit the design?

Daniel J. Hettich: I -- I think, Your Honor, I mean, the statutory language, but -- Official 1 but I think, then, if by design you mean, like, what the stated intent, I mean, what the purpose, the purpose of the DSH fraction, right? As a patient -- as a hospital's DSH fraction goes up, its DSH payment is supposed to go up. That's the way it's -- it's designed. The -- the two work in tandem, higher DSH percentage, higher -- higher payment. In this case, as I was explaining a moment ago, the Secretary turns that on -- on its head, and by treating exhausted indigent patients, the more of those patients you treat, the lower your DSH payment goes. It's not just that it stays the same or doesn't go up as much; it -- it marches downwards. That is completely inconsistent with, I think, what -- what this Court recognized was the purpose and the design --

Justice Alito: But I just mean -- are you saying anything more than the purpose is to give you money and your provision gives us -- your interpretation gives you more money? Are you saying anything more than that?

Daniel J. Hettich: I -- I am saying something more than that, Your Honor. I'm Official 1 saying that the -- the purpose, as this Court held in Allina, was to -- and this Court used the word "incentivize" -- to provide the resources and incentive to treat indigent patients. And by turning it on its head, it's not just more money, but if you start taking money away for treating indigent patients, which, as I was explaining, that's the phenomenon, 80 percent -- over 80 percent of the time, they're actually losing money, that it turns the whole -- you know, the whole DSH payment into -- into a penalty, and that's inconsistent with the design. And -- and it gets to that place by violating multiple canons of statutory interpretation on top of it, right?

Justice Alito: Well, I know about all the --

Daniel J. Hettich: Yeah.

Justice Alito: -- canons of statutory interpretation. All right. Thank you.

Chief Justice Roberts: Justice Sotomayor? Justice Kagan? Justice Gorsuch, anything further? Official 1 Justice Kavanaugh?

Justice Kavanaugh: Just so I understand that, I -- I -- your answer there, I mean, the two things are supposed to track because the formula is supposed to track the number roughly --

Daniel J. Hettich: Uh-huh.

Justice Kavanaugh: -- of poor patients a hospital serves, and the more they serve, the payments are supposed to correspond?

Daniel J. Hettich: Uh-huh.

Justice Kavanaugh: And this -- you say yours more accurately tracks that, right?

Daniel J. Hettich: Correct.

Justice Kavanaugh: All right.

Daniel J. Hettich: That's right, yes.

Justice Kavanaugh: Just so I understand. Okay.

Chief Justice Roberts: Anything? Thank you, counsel. Mr. Bond, rebuttal? REBUTTAL ARGUMENT OF JONATHAN C. BOND ON BEHALF OF THE PETITIONER

Jonathan C. Bond: Thank you, Mr. Chief Justice. Four points. Official 1 First, I understand Respondent to have confirmed that his reading requires making the Medicare fraction an island within the Medicare statute, and the basis for that in their view is the phrase "for such days," a reading of that phrase that four circuits rejected in the Medicaid fraction context. As I think the colloquy illustrated, our reading does not render that phrase superfluous because it tells you at what point in time do you measure a person's entitlement. But, beyond that, that phrase can't change what "entitled" means or what it takes to be entitled, which the statute sets forth, and the phrase doesn't give you a reason to think that a person who -- whose care Medicare doesn't pay for is any more low-income than another. So it doesn't fit with the basic statutory design. And, finally, it disregards the additional benefits that Justice Thomas pointed out are still available under Part A. Second, Respondent referred to the SSI benefit calculation and what codes are included. The -- the agency specifically addressed this in the 2010 regulation cited in our reply at page Official 1 10. The key part is at JA 179 to 83 and, on the codes, at 181 to 83. The agency explained that it got the codes from the Social Security Administration to confirm that it had the right codes to track entitlement. The agency's view is not that unless the check lands in your mailbox, you're not entitled. It's, rather, if you meet the criteria as determined by SSA, then you are entitled. But, if we're wrong about that, the answer is not to skew the meaning of the provision that is in front of you. Neither court below addressed this -- the SSI fraction. The district court concluded it lacked jurisdiction to do so. And that is pending in another case. So I would leave that to one side and decide the question that is in front of you. Third, on the question of the agency reasoning and the explanation that it provided, at a general level, I don't think the agency is required in a rulemaking to provide all of its legal arguments and rebut every possible legal challenge to get Chevron deference. That would read Chenery to require putting appellate briefs Official 1 into preambles. But, in any event, here, the agency has provided authoritative statements of its reasoning in a variety of places, not just the 2004 rule that's directly at issue. Those include CMS Ruling 1498-R, discussed in our opening brief, which addresses Section 426 and the other Part A benefits, the 2010 regulation that I mentioned that addresses SSI benefits, and going all the way back to its decision in Edgewater, where it explained the overall design and population focus drove its approach to drop non-covered -- non-covered Medicare Part A patients from the Medicaid fraction. And fourth and finally, to the extent the Court is struggling to ascertain exactly what Congress is driving at in this very complicated statute, I think the answer is, regardless of whether there is any unambiguous answer, to go with the one that makes the most sense of the words Congress used and the overall -- overall architecture. Our approach does provide simplicity by saying you interpret who is entitled by looking at the provision that answers that Official 1 question and says who is entitled, and you reject a reading that requires an exhausted patient not to be entitled because the statute says that. Our reading fits together at least better with the overwhelming majority of the Act's provisions and has a plausible straightforward theory of the congressional design that fits with a population focus. And at a minimum, that's a reasonable reading on which Congress would want the agency's view to get deference.

Chief Justice Roberts: Thank you, counsel, counsel. The case is submitted. (Whereupon, at 11:09 a.m., the case was submitted.)