Chevron Deference Derailed
Advocacyby Kristin Rowan, Editor
Chevron Deference
“A government agency must conform to any clear legislative statements when interpreting and applying a law, but courts will give the agency deference in ambiguous situations as long as its interpretation is reasonable.”
This statement followed the unanimous (minus the three who did not take part in the decision) U.S. Supreme Court decision in the Chevron U.S.A., Inc. v. National Resources Defense Council. The case is known for establishing the extent to which a federal court should defer to a government agency’s interpretation of an ambiguous statement when constructing statutes.
Breaking Down Chevron Deference
For those of you who don’t have a law degree, here’s what that means:
- When a statutory term (required by law) is not explicitly defined and explained by Congress, there is room for interpretation
- When a government agency interprets that statutory term, the interpretation may come under question
- As long as the interpretation is not arbitrary (random), capricious (impulsive or unpredictable), or contrary to the statute (opposite the intent when put into practice), federal courts should give more weight to the government agency’s interpretation than to any other interpretation
Implications
At the time, the Supreme Court argued that if Congress leaves a term open to interpretation, it is either stated openness to interpretation, or an implied openness to interpretation. If a statute is implicity open, the intent of Congress is to allow a government agency to create provisions and regulations from that statute as they see fit.
No one foresaw the impact this ruling would have on commerce and regulation in the U.S. To date, the Chevron Doctrine has been cited nearly 18,000 times in federal court decisions. The application of a statute based on agency interpretation could no longer be questioned or changed by judicial review.
Chevron Deference in Home Health
Since the advent of the PDGM model, CMS has calculated payment rates based on its interpretation of budget neutrality. The National Association for Home Care and Hospice has disputed the validity of both the interpretation of budget neutrality and the formulas used to calculate it.
Last year’s 2024 CMS Proposed Rule cut payment rates even further with a 2.890% Budget Neutrality permanent payment rate adjustment and a temporary rate adjustment to account for alleged overpayments from 2020-2022.
The lawsuit filed against CMS in response to the 2024 Final Rule was dismissed. NAHC began pursuing an administrative review with CMS. However, CMS has already stated that their final position is that budget neutrality has been calculated within the law.
NAHC Comment: 2023 CMS Rule
“That proposal also fails logically in that it puts care access in severe jeopardy in applying a budget neutrality reconciliation methodology that takes PDGM-induced behavior changes to assess what otherwise would have been expended by Medicare in the absence of PDGM. In doing so, CMS fully fails to meet its obligation to ensure that the transition to a new payment model is budget neutral.”
Chevron Deference Repealed
In a landmark ruling on Friday, June 28. 2024, the Supreme Court removed the power of federal agencies to interpret laws and ruled that the courts should rely on their own intrepretation of ambiguous laws. Justice Elena Kagan, who dissented the ruling, predicts this change “will cause a massive shock to the legal system.”
Chief Justice John Roberts explained in his opinion that the Chevron Deference is inconsistent with the Administrative Procedure Act (APA). The APA is a federal law which contains instructions for courts to review actions by federal agencies. According to Roberts, the APA directs courts to decide legal questions using their own judgment. Therefore, he noted, agency interpretations of statutes are not entitled to deference. “…it remains the responsibility of the court to decide whether the law means what the agency says,” concluded Roberts.
NAHC to Refile Lawsuit after Chevron Deference Repeal
2024 Final Rule
In April, 2024, the lawsuit filed against CMS regarding the methodology for calculating budget neutrality was dismissed. Now, NAHC can refile the lawsuit and force CMS to justify its decision to enact repeated reimbursement cuts for home health.
In an interview on Wednesday, Bill Dombi told The Rowan Report, “This improves the chances of success for our lawsuit. CMS is going to have to support their regulatory interpretations going forward. Congress is going to have to offer more detail in its legislative language, leaving less to being open to interpretation.” Regarding the PDGM lawsuit, CMS argued that the law was clear and the agency’s interpretation was valid. The overturning of Chevron Deference allows the possibility of arguing that CMS’s interpretation of the law is flawed.
80/20 Rule
Dombi also explained that the Ensuring Access to Medicaid Services rule, also known as the 80/20 rule, was “drawn out of a whole cloth.” Previously, there were limited avenues available to challenge this rule. The repeal of Chevron Deference significantly improves the ability to challenge the 80/20 rule. The argument now, Dombi told The Rowan Report, is “Does CMS even have the authority to do this?”
More to Come
The Rowan Report anticipates more news coming out of Washington D.C. and the NAHC office regarding the 2024 pay cuts and the 80/20 rule. We will provide ongoing updates and information as it becomes available.
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Kristin Rowan has been working at Healthcare at Home: The Rowan Report since 2008. She has a master’s degree in business administration and marketing and runs Girard Marketing Group, a multi-faceted boutique marketing firm specializing in event planning, sales, and marketing strategy. She has recently taken on the role of Editor of The Rowan Report and will add her voice to current Home Care topics as well as marketing tips for home care agencies. Connect with Kristin directly kristin@girardmarketinggroup.com or www.girardmarketinggroup.com
©2024 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in Healthcare at Home: The Rowan Report. One copy may be printed for personal use: further reproduction by permission only. editor@therowanreport.com
