What the End of Chevron Deference May Mean to Us

During the last week of June, the U.S. Supreme Court unraveled the 1984 decision Chevron v. Natural Resources Defense Council. Chevron has been one of the most-cited decisions in American law, because it granted significant power to executive federal agencies that regulate many aspects of our lives and work.

The ruling will make it easier to challenge regulations across an array of issues, like keeping the air and water clean; ensuring that food, drugs, and consumer products are safe; Medicare coverage; and Centers for Medicare & Medicaid Services (CMS) regulations related to billing, coding, and the Conditions of Participation.

Legal challenges at the federal levels have relied on Chevron to defuse and dismiss challenges to regulations. According to the precedent established in Chevron, if part of the law Congress wrote empowering a regulatory agency is ambiguous, but the agency’s interpretation is reasonable, judges should defer to the agency.

Charlie Savage of the New York Times contended that critics of Chevron argue that the decision put too much power in the Executive Branch when courts are purportedly competent to interpret the law. Proponents of Chevron counter-argue that without the agency regulations, courts may be overwhelmed, dealing with many technical issues that judges have no expertise to resolve.

Jody Freeman, a Harvard University law professor who specializes in administrative and environmental law, suggested that the rejection of Chevron will create “a free-for-all for judges to dig into the nitty-gritty of everything agencies are doing” and “an invitation for interest-group lawyers to try to tie up the agencies in legal knots.” In contrast, the Supreme Court stated that “courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority. Courts are in a better position to resolve the statutory ambiguities.”

Although not identical in nature, think about what has happened in the courts since Roe v. Wade was struck down. Now, let’s consider what the Chevron decision might mean for coding and billing guidelines that will be on the table for payers to litigate the validity of, and how the guidelines may be modified in each court. Could we end up with guidelines that are not just payer-specific, but also state-specific? Are chest pains surfacing yet? 

The Healthcare Financial Management Association (HFMA) shared a perspective that hospitals that disagree with CMS’s application of the market basket in its annual determination of Medicare payments, which dictates whether an item or service is covered or not, could litigate and successfully argue the issue. “There are thousands of pages of regulations and manuals containing agency interpretations of program requirements such as coding for risk adjustment payments, qualifications for disproportionate share hospital payments, supervision requirements for use of physician extenders,” HFMA noted.

One suggestion offers a workaround employing negotiated rulemaking, a process in which a committee of agency experts and affected parties collaborates on proposed regulations. “Although negotiated rulemaking is not appropriate for all regulations, advocates have felt the approach can speed rule development, reduce litigation, and generate more creative and effective regulatory solutions,” Julius W. Hobson, Jr. wrote in a piece for Polsinelli earlier this year. “Congress has sometimes mandated negotiated rulemaking and established specific procedures and time frames to follow.”

What actions should revenue cycle and health information professionals take? Here are a few good places to begin, by:

• Reviewing and understanding the rationale behind the specific coding rules that may be used for an appeal. Just citing agency interpretations and regulations may no longer suffice, and go ignored by payers. If an appeal goes up the judiciary ladder, coding professionals and denial specialists may need to be able to pontificate about the rationale of the code applied and the sequencing of those codes.

• Capturing and comparing the application of payer coverage rules for similar patient populations; the billing requirements will be necessary to describe the norm. Again, payers may use the demise of the Chevron rule to apply their own billing requirements that you may need to defend against using. Imagine having to configure the organization’s or practice’s billing and edit systems for each payer’s application of the standard billing rules. Explaining the technological challenges to modify a billing system to accommodate rules that are unique to a single payer for the services being claimed for a Medicaid or Medicare patient will benefit the organization, should it file or be a party to a lawsuit against a payer.

• Proactively convening leaders from those functions that are substantially governed by agency regulations – finance, compliance, health information, coding, revenue cycle, payroll, pharmacy, laboratory, etc. – to forecast issues that may be controversial, such as whether and how much you can charge for copies of records, what is considered protected health information for individuals participating in research funded by a drug manufacturer, how pure a drug or vaccine must be, when overtime kicks in, and so forth.

• Logging the issues that have been defended based on agency rules.  Any of these are possibilities now that Chevron has been struck down.

I encourage readers to review the articles referenced in this article. These authors provided great insight that I hope I’ve incorporated in this article.

Additionally, readers should contemplate the “what ifs” for their organizations.  Promoting negotiated rulemaking with Representatives and Senators on high-priority topics and encouraging each of our professional associations to do the same may result in tempering the possible outcomes from the downfall of Chevron.

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About the Author:

Rose T. Dunn, MBA, RHIA, CPA, FACHE, FHFMA, is a past president and former interim CEO of the American Health Information Management Association (AHIMA) and recipient of AHIMA’s distinguished member and legacy awards. She is Chief Operating Officer of First Class Solutions, Inc.^sm, a healthcare consulting firm based in St. Louis.  First Class Solutions, Inc.^sm assists healthcare organizations in enhancing or transforming their health information management (HIM) operations, facility and physician office documentation, and revenue cycle performance, and provides coding support and coding audits. Rose also is the author of Libman’s HCC Fundamentals and Auditing programs.