Healthcare legal observers are still reacting to the Supreme Court’s recent decision to gut the Chevron doctrine, fundamentally altering the power federal agencies have to handle regulations as they find appropriate.
While the aftermath of the decision will likely play out in the months and years to come, many are keeping an eye out for legal challenges that could further change ongoing legal precedent.
Notably, the Supreme Court’s ruling may impact self-funded employers. It could also change how payers small and large allocate resources and carry out their operations. Smaller plans may struggle to keep up with the changing legal landscape, while larger plans have more resources to adapt but also have more moving parts when working across state lines, said Jenn Kerfoot, chief strategy and growth officer for DUOS, in an interview with Fierce Healthcare.
“How are you, as a health plan, going to be able to create uniform guidance?” Kerfoot posed to payers. “You’re going to waste a lot of time in the speculative unknown. Be really realistic and pragmatic, especially going into 2025.”
Still, Kerfoot noted that agencies weakened power could be a boon for those with the resources to press their advantage.
“For plans that I speak to that have a lobbying block, I will say there was a rejoice,” Kerfoot said.
Others are concerned the Supreme Court ruled too heavily on the side of courts and Congress, choosing to minimize the institutional knowledge needed to understand the ramifications of complex regulations.
Although agencies have overreached in the past when interpreting ambiguous law, overturning the Chevron doctrine opens up a can of worms that will make creating legislation and regulation more difficult, said National Alliance of Healthcare Purchaser Coalitions President and CEO Shawn Gremminger.
“The idea that folks at HHS should not have some sort of deference, and instead a not-terribly smart, very political district court judge in Texas ... is the person who should be interpreting federal law [and] that they are the sole arbiters—that’s my challenge for why I’m worried about this rule,” he said during a recent webinar. “What do we do in a world in which litigants can district shop [and] find a judge that will clearly side with you? And now any regulations even plausibly out of line with statute will be held up in court for years and years?”
Judiciaries must now decide whether an agency’s interpretation is best as opposed to just reasonable, putting strain not only on judges to become healthcare experts but on Congress to write extremely clear laws, said Chris Deacon, principal owner of VerSan Consulting.
Since 2022, no federal agency contested more agency claims under Chevron than HHS, with deference awarded in 11 cases and denied in eight. It has been invoked by the Department of Labor when determining whether preventive services can be covered without cost-sharing under the ACA, Deacon explained.
“I think the bluntness and the way it was shut down was somewhat surprising, but Chevron has been under scrutiny for some time,” she said.
She anticipates there will be a “chilling effect” for federal agencies to delay issuing new regulations until there is less uncertainty about the effects of the Supreme Court’s decision. The practice of passing vague legislation and letting agencies fill in the gaps so bills don’t stall also may no longer be a viable strategy.
The No Surprises Act was an example of legislation where lawmakers agreed on the bill but could not agree on the finer details, said Gremminger. Without Chevron, the agency might find more trouble in getting legislation over the finish line.
He added that he heard from Democrats before the Inflation Reduction Act (IRA) was passed that the drug price negotiation provisions would need to be ‘Trump-proofed’ to ensure their efforts are not easily revoked should President Trump earn reelection, adding to the legislative complexity and political calculations that must be considered when writing a bill.
Hospital reimbursements are one of the biggest areas of potential litigation to watch following the overturning of Chevron, in addition to a challenge to elements of the Mental Health Parity and Addiction Equity Act, said Deacon.
Other areas, such as reproductive rights, fiduciary responsibility and hospital price transparency don’t appear ripe for legal challenges yet, though Deacon acknowledged it's very difficult to forecast out all legal obstacles to come.