Supreme Court Overrules Chevron: How Could It Affect Healthcare?
What can the public healthcare sector expect from the recent Chevron ruling
If you’ve been following the news lately, you’ve likely heard about the Chevron deference being overruled. However, many individuals are curious about what this means for healthcare and leaders are working to understand how it will affect public health policy. To get you up to speed on this latest ruling, we’ll shed light on the Supreme Court’s overruling of the Chevron deference and its potential repercussions on the public health sector.
What is the Chevron deference?
The term “Chevron deference” originates from the 1984 Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. case. This case marked a turning point, as the Supreme Court established a principle that courts should give deference to the executive branch when statutes passed by Congress are ambiguous. While this wasn’t a healthcare case, federal agencies, like the Food and Drug Administration (FDA), are a part of the executive branch, which was given power to implement laws within their scope of expertise.
The overruling of the Chevron deference
On June 28, 2024, the Supreme Court overturned the 1984 Chevron doctrine in a 6-3 decision. The court ruled that the deference violated the Administrative Procedure Act (APA) by improperly prioritizing agencies’ interpretations over court interpretations. This means the court will no longer defer to federal agencies’ reasonable interpretations of ambiguous laws. Now, federal judges can decide what a statute means for themselves, thus expanding the judicial branch's role in policymaking.
How does the Chevron deference affect public healthcare?
The recent Chevron doctrine ruling impacts several sectors, as there are federal agencies for everything from public safety to environmental concerns. However, we will focus on the potential repercussions that industry publications and resources anticipate in the public healthcare sector.
1. May limit new programs, initiatives and requirements
Before the recent ruling, federal agency leaders could make changes based on their knowledge and expertise. However, as Foley & Lardner LLP mentioned, these leaders may now face pushback when developing new programs and requirements.
Consider how the U.S. Department of Health and Human Services (HHS) governs many federal healthcare programs, including the Centers for Medicare and Medicaid Services (CMS). Medicare alone accounts for 12% of total federal government spending and has 67.2 million enrollees. If HHS establishes new requirements for these programs that aren’t explicitly authorized by law, their regulations may be challenged.
2. Medicare reimbursement and providers
Baker Donelson noted that Medicare reimbursements, in particular, now face vulnerability. HHS and its sub-agencies occasionally make changes that limit reimbursements for healthcare organizations and prescriptions. Often, they’d cite Chevron to support their position, but with the recent overruling, providers may see an opportunity to challenge an agency’s position.
3. The Affordable Care Act (ACA) may be challenged
Section 1557 of the ACA bans discrimination based on sex, national origin, age, color, race or disability. This ban applies to all health programs and activities receiving federal financial assistance. On May 6th, 2024, federal agencies published a Final Rule further interpreting this provision, focusing on Limited English Proficiency requirements and gender identity.
However, now that the Chevron deference has been disrupted, the courts can interpret the ambiguous language in this regulation. Interpretations like this often shift with changes in partisan control of the presidency, so it’s vulnerable and may be challenged by the court.
4. Delayed response to urgent issues
HHS leads the Federal public health and medical response when public health emergencies occur. Part of that may include creating new regulations to combat pressing issues, like what was seen with COVID-19. Foley Hoag pointed out that the Chevron overruling may make federal agencies “less nimble” in responding to new problems, which could profoundly impact suppliers, providers and patients.
5. Complicated decision-making
The healthcare system is complex and has many moving parts, which is one reason why deference was given to federal experts. The U.S. government allowed these agencies to make reasonable decisions on scientific and technical manners where congressional law was ambiguous. However, with Chevron overturned, judges who lack the correct expertise can now make technical decisions that impact millions of Americans.
The Brennan Center also states that Congress lacks the resources to take on more responsibility.
Justice Elena Kagan stated that federal agencies are best fit to handle these matters when she asked her fellow judges two intricate healthcare questions: "What qualifies as a protein regulated by the FDA? And how should the Medicare program measure a ‘geographic area’ when calculating hospital reimbursements based on the wage levels in certain regions?” Chief Justice John Roberts felt differently, though. He expressed, "Chevron’s presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do.”
6. The FDA may face increased challenges
The Food and Drug Administration (FDA) has relied heavily on the Chevron doctrine to decide on medical devices, drugs and various medical products. The Federal Food, Drug, and Cosmetic Act (FDCA) gives them the authority to oversee these matters, which includes multiple statutes with ambiguous language.
Because of this, Baker Donelson believes that the FDA’s regulations will be challenged more often even if the courts still rely on the FDAs interpretations. They’ll likely still see an increase in appeals simply because the court can decide to interpret these ambiguities without deference to the FDA.
7. Fraud and abuse in healthcare
The healthcare industry has numerous fraud and abuse laws to protect patients that, for decades, have been interpreted by agencies like the HHS, CMS, and the Office of Inspector General (OIG). The Anti-Kickback Statute, for example, prohibits payments or incentives meant to reward or induce patient referrals or business generation involving services or items payable by federal healthcare programs. However, according to Baker Donelson, compliance and litigation strategies in this space are likely to be challenged.
Additionally, HORNE remarked how some feel that the current rules governing physician-hospital financial relationships are overly burdensome and offer minimal benefit to patients. They said that some cases have led to providers being pushed out of the market, which may limit access to care and overall quality.
With this recent ruling, regulatory compliance will likely change, and participants must determine how to navigate this new regulatory environment.
The Chevron deference overruling will impact public healthcare
Although the Chevron trial was not a healthcare case, it could significantly affect the interpretation of healthcare regulatory law. We’ll likely see increased appeals and slower rulemaking. However, there’s also a potential we’ll see more carefully thought-out policies from Congress and a reduction in executive power abuse.
Only time will tell the true impact of this legal change, but we’ll be here to navigate these changes as they come.
At OpenLoop, we stay up-to-date on all the regulatory and legal activities in the industry to ensure our clients remain compliant with changing policies. Our full suite of white-label telehealth solutions offer our clients the ability to seamlessly manage their patients and scale their offerings.
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