Stephanie Armour
The landmark Supreme Court decision, which curbs the power of federal agencies, is expected to have a dramatic impact on the nation’s health care system, calling into question government regulation of everything from consumer protections for patients to drug safety to nursing home care.
The June 28 decision overturns a 1984 precedent that said courts must defer to federal agencies in lawsuits challenging their regulations or scientific decisions. Now, instead of giving precedence to federal agencies, courts will make their own judgments about what Congress intended when it wrote a particular law.
The ruling is likely to have a major impact on health care policy, potentially triggering a flood of lawsuits from plaintiffs including small businesses, drug companies and hospitals challenging regulations that aren’t written into law, leaving the country with a patchwork of localized health care regulations.
Agencies such as the FDA are likely to be much more careful in drafting regulations, Congress is expected to take more time to flesh out 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 the health system should prepare for more uncertainty and less stability in the health care system. Even routine government functions, like determining physician payment rates for treating Medicare beneficiaries, could become embroiled in drawn-out legal battles that disrupt patient care or force providers to adapt.
Andrew Tuinamatzko, director of the Health Policy and Law Initiative at Georgetown University’s O’Neill Institute, said anti-regulation groups could seek out and secure partisan judges to overturn agency decisions. One example is a challenge to the FDA’s approval of a drug used in abortions that was turned down on technical grounds before the Supreme Court this term.
“Judges are going to be much more willing to question government institutions,” he said. “Government institutions are going to be under attack.”
Regulations are effectively technical instructions for laws enacted by Congress: Federal agency officials with knowledge of the law, such as rare disease drugs or healthcare for seniors, decide, with input from industry, advocates and the public, how to put Congress’ words into practice.
In the past, when government agencies issued regulations, there was typically one rule that applied nationwide. However, following the Supreme Court decision, litigation in multiple jurisdictions can result in conflicting rulings and regulatory requirements, meaning healthcare policies for patients, healthcare providers, and insurers can vary significantly from one region to another.
For example, one circuit may uphold a Centers for Disease Control and Prevention regulation while another circuit may take a different view.
“The court could have eight or nine of the 11 different views,” said William Buzbee, a professor at Georgetown University Law School.
Maura Monahan, a partner at Debevoise & Plimpton, said a court in one circuit could issue a nationwide injunction to enforce its interpretation while another circuit could disagree. Few cases reach the U.S. Supreme Court, and conflicting instructions could remain in place for years.
Health policy leaders say agencies should prepare for more litigation over controversial initiatives in the near future. For example, the Affordable Care Act’s requirement that most health insurance plans cover preventive care is already the subject of litigation. Multiple challenges to the mandate could mean that preventive care coverage requirements will vary depending on where consumers live.
Drug companies have sued to block the Biden administration from implementing a federal law that would require makers of the most expensive drugs to negotiate prices with Medicare, a key pillar of President Joe Biden’s efforts to lower drug prices and rein in health care costs.
Some in the health care industry may adopt doctor payment rates set by the Centers for Medicare and Medicaid Services, which issues rules to update payment rates for Medicare, the health insurance program for people age 65 and older and those younger than 65 who are disabled. Groups representing doctors and hospitals regularly gather in Washington, D.C., to lobby against lowering payment rates, because those rates are not specified in law.
Healthcare providers, including some backed by deep-pocketed investors, are also suing to block a federal surprise bill. The No Surprises Act, passed in 2020 and set to take effect in 2022 for most Americans, is intended to protect patients from unexpected, out-of-network medical bills, especially in emergency situations. The Supreme Court’s decision is expected to further intensify litigation over its implementation.
“This really would be a fundamental change in how government regulations work,” Tuinamatzko said. “The work that’s been done since 1984 has created stability. When the FDA or CDC puts regulations in place, they know those regulations will be respected. That’s been rescinded.”
Industry groups including the American Hospital Association and AHIP, the insurer trade group, declined to comment.
Agencies like the FDA will be vulnerable because they use their regulatory powers to make certain decisions, such as granting marketing exclusivity when approving drugs, because many of their decisions require discretion rather than being clearly defined in federal law, said Joseph Roth, a professor of medicine and public health at the Yale University School of Medicine.
“The laws that govern a lot of what the health care sector does, like the FDA and CMS, are not prescriptive,” he said.
Indeed, FDA Commissioner Robert Califf said last year on the “Healthcare Unfiltered” podcast that he was “very concerned” about the chaos that would result from judges overturning the FDA’s scientific decisions.
The Supreme Court’s decision will be especially important for the country’s federal health agencies because their regulations are often complex, creating opportunities for more intense legal battles.
Challenges that may not have been successful in court because of deference to government institutions may now find a more favorable outcome.
“A lot of the existing regulations could be weakened,” said Larry Levitt, KFF’s executive vice president for health policy.
There could be other repercussions: Congress may try to iron out details when drafting bills to avoid challenges, but that approach could intensify partisan conflict and further slow the already slow pace of legislation, Levitt said.
Government agencies are expected to be more careful in crafting regulations so as not to overstep the bounds of the law.
The Supreme Court’s 6-3 decision was overturned. Chevron USA v. Natural Resources Defense CouncilThe ruling said that as long as a federal agency’s interpretation of the law is reasonable, courts should generally uphold it. Republicans have largely praised the new ruling, saying it’s necessary to stop agencies from overstepping their authority, but Democrats responded by saying it amounts to a judicial power grab.
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