The Supreme Court’s landmark decision reining in the powers of federal agencies is expected to have dramatic consequences for the nation’s health care system, raising questions about government regulations on anything from consumer protections for patients to drug safety and nursing home care.
The June 28 ruling overturns a 1984 precedent that held that courts should give deference to federal agencies in legal challenges to their regulatory or scientific decisions. Instead of deferring to agencies, courts will now make their own independent judgments about what Congress intended when it drafted a particular law.
The decision is likely to have a huge impact on health policy. A flood of lawsuits — in which plaintiffs such as small businesses, drugmakers and hospitals challenge regulations they say are not specified in the law — could leave the country with a mess of different health regulations in different places.
Agencies like the FDA will be more cautious in drafting regulations, Congress is expected to take more time to enact legislation to avoid legal challenges, and judges will be more likely to strike down current and future regulations.
Health policy leaders say patients, providers and health systems should prepare for more uncertainty and less stability in the health care system. Even routine government tasks such as setting payment rates to doctors for treating Medicare beneficiaries could become embroiled in lengthy legal battles, disrupting patient care or pressuring providers to adapt.
Andrew Twinmatsiko, director of the Health Policy and Law Initiative at Georgetown University’s O’Neill Institute, said groups opposed to regulation could seek out and secure partisan judges to overturn the agency’s decision. An example of this could be the challenge to the FDA’s approval of a drug used in abortion, which on a technicality survived a Supreme Court challenge this time.
“This will give judges more courage to doubt the agencies,” he said. “This will increase the risk of attacks on the agencies.”
Regulations are actually technical instructions for laws written by Congress. Federal agency employees who have access to information related to the law — such as drugs treating rare diseases or health care for seniors — decide how to turn Congress’ words into action, with input from industry, advocates and the public.
Until now, when agencies issued a regulation, the same rule generally applied across the country. However, after the high court’s decision, lawsuits filed in more than one jurisdiction could result in conflicting rulings and regulatory requirements — meaning health care policies for patients, providers or insurers could vary greatly from one region to another.
For example, one circuit might uphold a regulation by the Centers for Disease Control and Prevention, while another circuit might take a different view.
“You could have 8 or 9 out of 11 different viewpoints from courts,” said Georgetown Law professor William Buzbee.
A court in one circuit could issue a nationwide injunction to enforce its interpretation even when another circuit disagrees, said Maura Monaghan, a partner at Debevoise & Plimpton. Very few cases are considered by the U.S. Supreme Court, which could leave conflicting directives in place for years.
In the near future, health policy leaders say agencies should be prepared for more litigation over controversial initiatives. For example, there is already litigation over the requirement that preventive services be included in most Affordable Care Act health plans. The many challenges to the requirement could mean that there will be different coverage requirements for preventive care depending on where a consumer lives.
Drugmakers have sued to block the Biden administration from enforcing a federal law that forces makers of the most expensive drugs to negotiate prices with Medicare — a key step in President Joe Biden’s effort to lower drug prices and control health care costs.
Some parts of the healthcare industry may adopt reimbursement rates set by the Centers for Medicare & Medicaid Services for doctors because those specific rates are not written into law. The agency issues rules to update payment rates in Medicare, a health insurance program for people age 65 and older and people with disabilities. Groups representing doctors and hospitals regularly come to Washington, D.C., to lobby against cuts to their payment rates.
And providers, including those backed by wealthy investors, have sued to stop the federal surprise-billing law. The No Surprises Act, which passed in 2020 and takes effect for most people in 2022, aims to protect patients from unexpected, out-of-network medical bills, especially in emergencies. The high court’s ruling is expected to lead to more litigation over its implementation.
“This is really going to be a major change in the administrative regulatory landscape,” Twinamatsiko said. “Since 1984, this approach has created stability. When the FDA or CDC adopts regulations, they know those regulations will be respected. This has been rolled back.”
Industry groups, including the American Hospital Association and AHIP, the trade group for insurers, declined to comment.
Agencies like the FDA that leverage their regulatory authority to make specific decisions, such as granting exclusive marketing rights when a drug is approved, would be weakened. The reason: Many of their decisions require discretion rather than being clearly defined by federal law, said Joseph Ross, a professor of medicine and public health at the Yale School of Medicine.
“The laws that guide most actions in the healthcare sector, such as those of the FDA and CMS, are not prescriptive,” he said.
In fact, FDA Commissioner Robert Califf said in an episode of the “Healthcare Unfiltered” podcast last year that he was “very concerned” by the disruption of judges overruling his agency’s scientific decisions.
The high court’s decision will be particularly important for the nation’s federal health agencies, because their regulations are often complex, creating the potential for more difficult legal battles.
Challenges that might not have succeeded in court because of deference to agencies may now receive more favorable outcomes.
“The whole range of existing regulations could be weakened,” said Larry Levitt, executive vice president for health policy at KFF.
Other outcomes are also possible. Levitt said Congress might try to provide more detail when drafting legislation to avoid challenges — an approach that could exacerbate partisan gridlock and slow the already slow pace of passing legislation.
Agencies are expected to exercise greater caution when writing rules so they do not exceed the limits of the law.
The decision was overturned by a 6-3 Supreme Court decision Chevron USA v. Natural Resources Defense CouncilThe ruling stated that courts should generally support a federal agency’s statutory interpretation as long as it is reasonable. Republicans praised the new ruling as necessary to ensure that agencies do not overstep their authority, while Democrats said it amounted to an usurpation of judicial power.
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