What the Supreme Court's Chevron ruling means for healthcare

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The Supreme Court ruling on June 28 to overturn the Chevron doctrine will affect healthcare regulations concerning Medicare, Medicaid and even AI, according to experts.

On June 28, in a 6-3 vote, the Supreme Court got rid of the decades-long Chevron doctrine that has been in place since the Reagan administration. The decision was seen as a win for conservatives and divided the court along ideological lines.

Chevron protected many federal regulations from legal challenges. Now, judges will be freer to impose their own readings of the law – giving them broad leeway to upend regulations on healthcare, the environment, financial regulations, technology and more, Politico said.

Prior to Chevron being struck down, federal agencies such as the Centers for Medicare and Medicaid Services had the flexibility to expound upon statutory language based on expert analysis. Now federal agencies no longer have that flexibility unless the statute is clear.

WHY THIS MATTERS

The decision on Chevron, in a case called Loper Bright Enterprises v. Raimondo and its companion case, Relentless v. Dept. of Commerce, has an impact on CMS' ability to modify or build on language in final rules.

The Chevron doctrine allowed agencies such as the Department of Health and Human Services and CMS to interpret ambiguities in federal law, creating stability and efficiency for programs such as Medicare and Medicaid, according to Cristina Rodriguez, senior counsel for Wolfe Pincavage.

SCOTUS's decision has healthcare experts worried about a potential regulatory crisis, she said in a statement. It could cripple the ability of HHS and CMS to address critical issues, such as regulating rapidly evolving technology like AI.

It could also hinder proposals such as drug pricing negotiations and mental health parity, because CMS relies on its expertise to implement such programs, Rodriguez said. It could threaten programs for low-income patients, such as the 340B Drug Discount Program.

The agency could be stuck between having no new policy unless there is a statute for rulemaking and not having the ability to build on existing rules, according to Michael Cheek, president and CEO of SNP Alliance, an association that represents over 1,300 special needs plans nationwide.

"What we're doing is thinking about what it means for regulatory action," Cheek said. "We look at it from a rulemaking perspective going forward. The court ruling might make CMS more cautious with regulations. That will be a decision they make on a case-by-case basis."

For multiyear regulation implementations, if CMS questions its own authority, the agency will have to decide whether to press pause or forge ahead, Cheek said.

For instance, there is a multiyear provision related to integrated D-SNPs, dual special needs plans. CMS has a plan to make some changes as to how these plans are offered.

"It raises a lot of questions and volatility," Cheek said. " It could affect dual eligibles in integrated plans."

A KFF issue brief examines some of the far-reaching implications for health policy.

"Analysts expect that more regulations will be overturned, erecting a new barrier to implementing key healthcare protections from the affordability of prescription drugs in Medicare, eligibility rules for Medicaid beneficiaries, infectious disease control and public safety standards, as well as consumer protections for people in self-insured private employer-sponsored plans," KFF said.

The decision does not affect agencies' ability to enforce healthcare statutes using existing tools, including audits, data collection and administrative agency proceedings.

THE LARGER TREND

The Chevron decision is already affecting policy.

It is seen as a factor in Hackensack Meridian Health suing Health and Human Services Secretary Xavier Becerra over the calculation of Medicare reimbursement used to determine Disproportionate Share Hospital payments.

Moody's Investors Service said the decision diminishes federal agency authority and shifts power to the courts, triggering ripple effects that could have widespread credit effects.

This development carries mixed implications for the healthcare industry. Numerous regulations covering reimbursement, insurance eligibility and many other aspects of the industry directly affect revenue and/or expenses, Moody's said.

During January's oral arguments in the case, Supreme Court Justice Elena Kagan cited AI as one arena where courts could be ill-suited to overturn agencies' expert judgments, among other "countless policy issues that are going to confront this country in the years and decades ahead," according to Politico.

"What actions can be taken to address climate change or other environmental challenges? ... What rules are going to constrain the development of A.I.? In every sphere of current or future federal regulation, expect courts from now on to play a commanding role," Kagan wrote. "It is not a role Congress has given to them. ... It is a role this Court has now claimed for itself, as well as for other judges."

Brett Kavanaugh, one of the conservative justices who joined the ruling, said in January that doctrine was allowing new administrations to make sharp changes in how agencies interpret laws, resulting in "extreme instability."

ON THE RECORD

"As we described in our Amicus Brief, which Justice Kagan drew on in her dissent, this rule has long helped ensure that healthcare laws are interpreted and implemented appropriately. We anticipate that today's ruling will cause significant disruption to publicly funded health insurance programs, to the stability of this country's healthcare and food and drug review systems, and to the health and well-being of the patients and consumers we serve," said the American Academy of Pediatrics, American Cancer Society, American Cancer Society Cancer Action Network, ALS Association, American Heart Association, American Lung Association, American Public Health Association, American Thoracic Society, Bazelon Center for Mental Health Law, Campaign for Tobacco-Free Kids, Child Neurology Foundation, Epilepsy Foundation, Muscular Dystrophy Association, National Health Law Program, Physicians for Social Responsibility, the Leukemia & Lymphoma Society, and Truth Initiative.

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Email the writer: SMorse@himss.org