How does Chevron affect healthcare agents?

The Supreme Court has made a few weighty decisions lately, but one stands out to us as health insurance agents: the Chevron doctrine. Who knew that a group of fishermen in New Jersey upset about fees could affect Medicare, but that’s essentially what happened. Let’s look at what might be coming up in the future regarding the health care system because of this recent decision.

What happened?

Named after the 1984 court case that birthed it, the Chevron doctrine required governing agencies to interpret a statute if its language wasn’t specific enough to make a concrete decision. Any time legislation was murky, the associated governing agency would step in and demystify.

Sometimes it would happen in court, and sometimes it would happen in rules and regulations. We agents are familiar with this already. The final rules for Medicare and the payer notices for individual under 65 should ring a bell.

As it goes now, for example, imagine Congress writes a law stating that beneficiaries can get a medication covered without copays as long as they need it. A Medicare Advantage plan then denies a beneficiary coverage for that medication, stating she no longer “needs” it, despite her prescription. If that decision is disputed legally, CMS would be called upon as the agency of authority. Then, CMS further elaborates on what the words “need” or “can” meant in this situation.

But as of June 2024, this doctrine has been overturned. If this same case is brought to the court, then it would be up to the judge to “exercise independent judgment in deciding whether an agency has acted within its statutory authority.” In simpler terms, the judge gets to decide if that agency was within its rights to write that rule at all. And, the judge also decides what Congress meant when they wrote the law in the first place.

Instead of determining if the call made by an agency is “reasonable,” they have to determine if it’s the “best” call. This forces judges to read up on whatever topic finds its way into his or her courtroom. They can defer to an overarching agency if they want to ask for advice, but they do not have to pass the baton over to that related agency.

As of now, this decision cannot be used as a reason to change any previous decisions unless a special justification can be found in the lower courts. On top of that, six years must pass before someone can challenge an executive branch action.

What could be changed?

Well, a lot. Looking at the panoply of rules that CMS and HHS have made since the birth of Medicare, ACA, etc., they skew ambiguous, only calling out specific practices when necessary. HSS also has the most agency claims under Chevron, with 11 in total deferring and eight denied. And now, if any wiggle room can be found in a rule's wording, then a court case could start wiggling it.

CMS is still in charge of (tasked with, in legal jargon) Medicare and the like, so they can still release regulations regarding what is allowed and what is not. But if a rule is challenged in court, CMS does not get to come in with its knowledge as a subject matter expert to clarify what the intention was or what data might support. The case will rely instead on the skills of the judge to interpret.

Give me some examples

Assuming a judge knows everything about everything is unfair, and there is no shame in phoning a friend. However, Chevron deferrals are particularly numerous in the health care space because of the nuances baked into it.

Let’s look at a real world example: The first court appeal regarding the No Surprises Act since the overturning of Chevron. In the most simple terms, the courts had to determine if arbiters were given enough rules to fairly determine how much of a “surprise” medical bill a consumer was responsible for when resolving disputes between plans and consumers. Congress, when they passed the No Surprises Act, didn’t foresee some of the issues arbitrators were facing, and arbitrators needed more rules to do their job effectively. So the Department of Health and Human Services (we called them “the agency” before) did exactly that, and made more rules.

Then that ruling got appealed, then Chevron got overturned.

The court’s first job was to determine if the agency was allowed to narrow these arbitration rules down further or not. It was determined that Congress didn’t intend for the agency to step in to make these rules clearer.

Then, the court got to decide what those rules would actually be. They found that the rules were mostly fine as they were, and if the arbiter wanted to consider more information, they could do so as long as they explained why.

So this decision stripped the agency of the right to clarify these rules and gave it to the arbitrators themselves. Instead of “that rule sounds good to me, let’s go with that” the court got to say, “I am not sure, let’s just do what I think is best.”

This is not the only area that could be challenged or interrupted: drug and medical device safety; certification and enrollment regulations; fraud and abuse compliance and enforcement; privacy and HIPAA protections; and accreditation procedures just to name…well, almost anything in the health insurance space.

So now what?

All of this could happen, but there is no guarantee that any of it will. Judges can still choose to defer to a governing agency if they want to. And, nothing that is currently established can be challenged for at least six years unless it is appealed for another reason. In the meantime, agents should keep in mind that rules are rules, but they can change at the drop of a hat. Which is why you should always make sure to be on the cutting edge. Of course, Chevron or not, you can always turn to us, your friendly neighborhood FMO, for help sifting through the legalese.