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In a landmark decision, the Supreme Court has dismantled the long-standing doctrine of Chevron deference.

This ruling has significant implications for federal health care programs, including those managed by the U.S. Department of Health and Human Services (HHS), which oversees Medicare and Medicaid. In turn, it could have huge ramifications for providers, including ambulatory surgery centers (ASCs) as well.

Established in 1984, Chevron deference mandated that courts defer to federal agencies’ interpretations of statutes they administer. The premise was that agencies, with their subject matter expertise, were better positioned than courts to interpret such statutes.

However, this difference often resulted in broad regulatory powers for agencies, including the Centers for Medicare & Medicaid Services (CMS).

An overturn of Chevron means that health care providers, including ASC operators, might find more success challenging CMS’s reimbursement determinations and other rules. Courts’ independent review could lead to more favorable outcomes for those seeking increased reimbursements, for instance. 

“The Chevron ruling could ultimately result in a plethora of litigation challenging federal rules and regulations governing health care,” health care attorneys with Baker Donelson wrote in a legal blog. 

One example outside of the ASC setting: The reversal could be a game-changer for nursing homes, which face a onerous staffing mandate under current federal health care policy. 

Another: Home-based care providers paid via Medicaid will, in the future, need to comply with a rule specifying that 80% of Medicaid reimbursement go toward direct care worker compensation. In light of Chevron, that scenario could be called into question.

Jacob Harper, a partner with Morgan, Lewis & Bockius LLP, which specializes in ASC-related law, told ASC News that the overturn of Chevron creates a more favorable environment for regulated entities than there has been for a long time.

But it will come with some potential complications, Harper noted.  

“As we continue to shift from volume to value, and the revision of fraud and abuse laws and reimbursement methodologies takes hold, providers may have a stronger voice and a seat at the table,” he said. “That said, it is important for providers to utilize that position effectively and fairly.”

Harper added that CMS and the HHS Office of Inspector General (OIG) will likely be more willing to entertain the perspective of the regulated community, though it is still important for operators to recognize that most rules are designed to prevent improper fiscal outcomes or to prevent bad actors from taking advantage of the system. 

“On the flip side, regulatory agencies may be less willing to provide informal interpretations of the law since their view doesn’t necessarily dictate the final legal interpretation of an issue,” he said. “Moreover, expect that Congress, as it continues to legislate health care-related bills, will be asked by CMS legislative liaisons for more granularity in statutes, or will be asked by CMS to simply preclude administrative and judicial review for certain agency determinations.”

Indeed, in light of the ruling, HHS may proceed more cautiously when developing new regulations.

This could slow the rollout of new policies affecting health care providers, including ambulatory surgery centers.

Different courts may interpret HHS regulations inconsistently, leading to regional disparities. 

“Because [the overturn of Chevron] directs courts to exercise independent judgment rather than defer to HHS’s interpretations, we expect that courts in different areas of the country may reach different conclusions regarding HHS regulations,” health care attorneys at Foley & Lardner LLP wrote in another legal blog. “This may make certain geographic locations more advantageous for provider and supplier operations or expansions.”

Harper said that ASCs should assess their current audit, compliance, and litigation risk areas to first determine if any active disputes may now be subject to the revised post-Chevron standard, and then consider what the potential impacts of that revised standard may be.

“Providers that are participating in agency administrative proceedings, such as before the Office of Medicare Hearings and Appeals or the Provider Reimbursement Review Board, should consider how the changes may affect how they choose to frame their case in preparation for a challenge before a federal district court,” he said.

He added that ASCs will need to stay active with their voices to ensure that as Congress is relied upon more for the development of healthcare policy details.

And much still hangs in the balance of the upcoming presidential election. 

“The results of the election are certainly a lot of what is going to transpire in the future with the health care industry and the ASC industry … ,,” Darren Patz, partner at DLA Piper, told ASC News. “So, how does Congress look after the election, and whose administration is drafting these regulations, which are now subject to challenge because of the Supreme Court decision? I think it’s extremely important to be working with Congress because Congress’s role is now more important in making health care policies impacting ASCs.”