Chevron Deference: Its Diminished Role (and Imminent Demise?)

The Chevron doctrine says that federal courts will defer to agency interpretations of federal statutes as long as the statute in question is either silent or ambiguous on the subject in question and as long as the agency interpretation is "reasonable." 

Note first the weasel words in my description of the Chevron doctrine:

• ambiguous: When is a statute ambiguous? Language is inherently ambiguous, and law schools train students to find ambiguity and exploit it for their clients whenever possible. Ambiguity is often in the eye of the beholder. Post-Chevron cases amply illustrate that the Supreme Court can split 5-4 over this very question.
• reasonable: The most overused word in the entire legal lexicon. What one judge regards as a reasonable interpretation may strike another judge as an outrageous overreach by the agency.

The result of the subjective nature of key terms in the Chevron doctrine has been controversy over the legitimacy of the doctrine itself. In fact, if memory serves, the very next agency case after the Court's decision in Chevron was decided without so much as a reference to Chevron. And since then, the Court has engrafted exceptions to the Chevron doctrine -- up to an including the Court's current fondness for striking down agency decisions by applying the Major Question Doctrine, itself a controversial development. ("What does "major" mean? Is it entirely in the eye of the beholder?)

A trusted source tells me the Court hasn't actually relied on Chevron in an agency case since 2014. That hasn't stopped conservative members of the Court who are unhappy about the "activist" policy choices of certain agencies' progressive agendas from expressing their disapproval of Chevron deference.

A number of cases are presently before the Court this term that may lead to a 6-3 or at least 5-4 disavowal of Chevron once and for all. One is Garland v. Cargill, No. 22-976, which raises the question whether a bump stock device is a “machinegun” as defined in 26 U.S.C. § 5845(b). The Justice Department says yes, and Michael Cargill argues that is wrong. Maybe the statute is unambiguous, in which case Chevron by its terms would not apply at all. The government, perhaps cannily, does not argue for Chevron deference in its principal brief on the merits and argues against Chevron deference in its reply brief (at p. 20):

4. Respondent next argues (Br. 48-50) that this Court does not owe deference to ATF’s interpretation under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).  But as the government has explained (Br. 43), it does not seek any such deference here because ATF’s regulation is not a legislative rule carrying the force and effect of law; instead, it is simply an interpretive rule announcing ATF’s understanding of the statute.  That should be the end of the matter.  See HollyFrontier Cheyenne Refining v. Renewable Fuels Ass’n, 141 S. Ct. 2172, 2180 (2021) (“ ‘[T]he government is not invoking Chevron.’  * * *  We therefore decline to consider whether any deference might be due its regulation.”) (citation omitted).  

Probably the best cases for a showdown over Chevron's continued existence involve a regulation involving fisheries, as discussed in a free article in JAMA posted to its website today:

Two cases currently before the US Supreme Court, Loper Bright Enterprises v Raimondo and Relentless, Inc v Department of Commerce, could potentially lead to the end of Chevron. Six commercial fishing ventures have challenged a rule requiring that fishermen pay the cost of government-approved observers who guard against illegal overfishing. Although the lower courts in both cases upheld the regulation under Chevron, the fisheries contend that the rule and Chevron itself are threatening the way of life for small, family-owned businesses. Justice Gorsuch was receptive, expressing concern during oral arguments that Chevron places a thumb on the scale in favor of the government at the expense of “the immigrant, the veteran seeking his benefits, the Social Security Disability applicant, who have no power to influence Agencies.” Justice Kavanaugh, meanwhile, noted that the historic role of the judiciary has been “to police the line between the legislature and the executive to make sure that the executive is not operating as a king,” seemingly implying that Chevron places agencies in the position of royalty.

Why does JAMA care? Because of the critical role of the federal government, acting through agency rules and decisions, to protect the health of the public:

From health care to climate change, federal agencies were created to marshal the resources and power of the government to improve the lives of individuals in the US. A longstanding pillar supporting these agencies, a legal doctrine called Chevron deference, grants them flexibility in carrying out their mandates to maximize policy impact and keeps them nimble amid changing circumstances. Now, a majority of the US Supreme Court, led most vocally by Justices Thomas and Gorsuch, appears poised to overturn this bedrock principle. The loss of Chevron could exalt policy choices made by judges over the expertise-based decisions by executive agencies, such as the Food and Drug Administration (FDA), Environmental Protection Agency (EPA), and Centers for Disease Control and Prevention (CDC). 

Prior Authorization & Your Health Insurer

Once upon a time, the way health insurance worked was this: Patients with insurance were seen by their doctors, received prescriptions for medications, and got the surgeries and other procedures their doctors believed were justified. Under these "indemnity plans," after the fact, invoices were submitted to health insurance companies, and -- by and large -- the invoices were paid. Not necessarily in full -- there were deductibles that needed to be met each year and reductions in "reimbursement" for the patient's co-pay or co-insurance obligation. But coverage was seldom an issue. Insurance companies conducted retroactive reviews to determine that the service or item was "medically necessary and appropriate," but most claims for payment were approved most of the time.

Until they weren't.

As new technologies and high-priced drugs and devices drove up the cost of health care, insurers looked for ways to control the amounts they paid out in claims. Under the broad banner of "managed care," insurers instituted various reforms that fundamentally changed the delivery of health care goods and services. 

One reform was to create panels or networks of approved providers, in exchange for which the insurance companies demanded deep discounts in physicians' fees and hospitals' charges. Patients who received their care -- even emergency care -- from providers who were "out of network" typically received no coverage for that care or reduced coverage, putting more of the cost of care on patients (i.e., the insurers' customers). 

Another reform was the integration of health insurance and healthcare provider. The purest form of this were the HMOs. Some provided health care services to their insureds; others contracted with providers to diagnose and treat their insureds. In both instances, a single entity was financially (and legally and ethically) obligated to write health insurance policies and provide care (either directly or indirectly) to their insureds.

A third reform relates to the title of this post: prior authorization, to which I would add concurrent authorization. "Prior authorization" gives the insurance company up-front veto power over referrals to specialists or for hospitalizations, for prescriptions for drugs and devices,  and for procedures (diagnostic (CT scans, e.g.) or treatment (including surgeries). "Concurrent authorization" gives insurance companies the same type of veto power throughout a course of treatment. This might be denial of a request for an MRI to see whether or how much a disease has progressed or denial of a request for an additional number of days of hospitalization to deal with post-procedure complications. And "retroactive review" -- which, under indemnity plans, were relatively benign efforts to determine medical appropriateness and necessity -- became a more rigorous process of "retroactive authorization."

Although managed care was originally justified as a necessary form of cost control, including screening insurance claims for those that were not for medically necessary appropriate care, managed care itself evolved into something that was increasingly regarded as abusive. The pattern of denying coverage for unarguably necessary and appropriate care produced a backlash over the past two decades, including legislative and regulatory reforms at the federal and state level to address the worst features of managed care.

A recent opinion video on the New York Times website (Mar. 14, 2024; subject to paywall) provides excellent evidence that insurance companies continue to use prior and concurrent authorizations to to delay or avoid altogether their contractual obligation to pay for care that is necessary and appropriate. (I can provide free access to eights readers of this post; if you want access, just let me know at tmayo@smu.edu.)

A handful of states have passed "gold card" laws that are intended to allow physicians who have successfully received prior authorizations to bypass that process altogether. According to the Texas Medical Association, two years after passage of the state's "gold card" law, "the Texas Department of Insurance (TDI) reports that only 3% of physicians and health care professionals have received gold cards because of the current eligibility threshold, which requires physicians to submit a minimum of five eligible prior authorization requests for a given health care service or medication within the six-month review period."

A federal version of the gold card law -- H.R. 4968, "Getting Over Lengthy Delays in Care As Required by Doctors Act of 2023" (or the "GOLD CARD Act of 2023") -- was referred last July 23 to the Subcommittee on Health of the House Ways and Means Committee, where it remains to this day. Even if it becomes law, exempts physicians from prior authorization requirements only under Medicare Advantage plans with respect to specific items and services if at least 90% of the physician's requests for such items and services were approved during the previous plan year. Outside of Medicare, patients and their providers would not be helped by the GOLD CARD Act.

FDR's Four Freedoms on the 4th of July 2023

In his State of the Union speech on Jan. 6, 1941, FDR famously offered up "the Four Freedoms" to explain why the United States was at war abroad and on a war footing at home. He introduced the Four Freedoms with this eerily familiar list of goals for the country: 

[T]here is nothing mysterious about the foundations of a healthy and strong democracy. The basic things expected by our people of their political and economic systems are simple. They are:

Equality of opportunity for youth and for others.

Jobs for those who can work.

Security for those who need it.

The ending of special privilege for the few.

The preservation of civil liberties for all.

The enjoyment of the fruits of scientific progress in a wider and constantly rising standard of living.

These are the simple, basic things that must never be lost sight of in the turmoil and unbelievable complexity of our modern world. The inner and abiding strength of our economic and political systems is dependent upon the degree to which they fulfill these expectations.

Many subjects connected with our social economy call for immediate improvement.

As examples:

We should bring more citizens under the coverage of old-age pensions and unemployment insurance.

We should widen the opportunities for adequate medical care. [emphasis added -- this is a HealthLawBlog, after all]

We should plan a better system by which persons deserving or needing gainful employment may obtain it.

Then FDR got to the part of his speech that made it so enduring:

In the future days, which we seek to make secure, we look forward to a world founded upon four essential human freedoms.

The first is freedom of speech and expression--everywhere in the world.

The second is freedom of every person to worship God in his own way--everywhere in the world.

The third is freedom from want--which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants-everywhere in the world.

The fourth is freedom from fear--which, translated into world terms, means a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor--anywhere in the world. 

As the Smithsonian has noted:

The public response? Crickets. Congress barely applauded. The next day most newspapers didn't even mention the “Four Freedoms.” Those who were still talking about the phrase in the weeks and months that followed did so to lambaste its “hollow, empty sound.” The government hired [E.B.] White and other A-list scribes to drum up some buzz, but White’s boss called his pamphlet “dull.” The “Four Freedoms,” in the words of one federal administrator, were a “flop.”

Ever the optimist, FDR concluded the list with this: "That is no vision of a distant millennium. It is a definite basis for a kind of world attainable in our own time and generation." Eighty-two years later the Four Freedoms are still aspirational, not real, for much of the world and for many of our fellow citizens. 

ChatGPT Summary of Congressional Testimony on “Innovation and Patient Access”

I'm re-posting the latest entry from Jason Shafrin's blog, "Healthcare Economist," for two reasons. 

First, "innovation and access" is and always will be an important health law and policy topic. The testimony on May 10 covered Alzheimer's, cancer, FDA regulatory issues, Big Pharma R&D, and NIH research support. Important stuff.

Second, the blog post consists of summaries of testimony that were generated, in whole or in part, by ChatGPT. 'Nuff said? I could have waded through the testimony and written my own summaries or paid a research assistant to do the same. And I would certainly read the testimony if I were citing it, relying on it, etc. I am guess, though, that these summaries are serviceable enough as background reading (and a way of determining whether the testimony appears interesting enough to invest more of my time reading it).

How to Save a Quarter-Trillion Dollars a Year in Health Care (Hint: It's Not as Easy as It Sounds)

The consulting firm McKinsey & Co. has a new report (full, executive summary) that identifies the sorts of administrative simplification that together could save the health care system $265 billion annually. As illustrated by a Perspectives piece in the October 20 issue of JAMA, that sum "would be more than 3 times the combined 2019 budgets of the National Institutes of Health ($39 billion), the Health Resources and Services Administration ($12 billion), the Substance Abuse and Mental Health Services Administration ($6 billion), and the Centers for Disease Control and Prevention ($12 billon)." As Everett Dirksen and Charlie Halleck might have said back in the day, a quarter-trillion here and a quarter-trillion there, and pretty soon you're talking about real money.

So, if administrative simplification is such a good idea and the benefits are so patently obvious, why has it not happened already? McKinsey identifies the types of changes that would need to be made. Some are changes that could happen within individual organizations (assuming regulators and private accreditation agencies were on-board). Other changes would need to be implemented between organizations (same assumptions and assuming public and private antitrust enforcement would permit it). And, finally, there are market failures that will require "seismic" interventions at the industry level -- "including the necessary decision-makers and influencers from both the public and private sectors for a given intervention" (emphasis added).

By comparison, the interventions introduced by the Affordable Care Act look downright modest. But the question remains: Can we really afford to continue to pay one trillion dollars every four years for nonbeneficial administrative waste?

CMS Proposes Final Interim Rule to Implement the No Surprises Act

Surprise medical bills are horrific events for patients and their families, throw insurance underwriting into disarray, and create or reinforce barriers to entry into the medical-industrial complex. The federal No Surprises Act (a relatively small part (32 pages) of H.R. 133, the 2,124-page Omnibus Reconciliation Act of 2021) was supposed to address the problem, but the new law needed a regulation to implement it. That rule -- in the form of a 411-page "interim final rule" with a request for comments -- dropped today.  CMS has provided a reasonably helpful fact sheet if you don't have time to wade through the rule's preamble. The rule is supposed to have an effective date of January 1, 2022, but don't be surprised if that date gets bumped. This rule will undoubtedly attract a ton of comments. The comment period closes 60 days after publication of the interim final rule in the Federal Register.

Surprise billing: It's still a thing

From the Kaiser Family Foundation's news service:

In Alleged Health Care ‘Money Grab,’ Nation’s Largest Hospital Chain Cashes In on Trauma Centers

After falling from a ladder and cutting his arm, Ed Knight said, he found himself at Richmond, Virginia’s Chippenham Hospital surrounded by nearly a dozen doctors, nurses and technicians — its crack “trauma team” charged with saving the most badly hurt victims of accidents and assaults. But Knight’s wound, while requiring about 30 stitches, wasn’t life-threatening. Hospital records called it “mild.” Nevertheless, Chippenham, owned by for-profit chain HCA Healthcare, included a $17,000 trauma team “activation” fee on Knight’s bill, which totaled $52,238 and included three CT scans billed at $14,000. His care should have cost closer to $3,500 total, according to a claims consultant which analyzed the charges for KHN. (KHN, Richmond Times-Dispatch)

The federal No Surprises Act (signed Dec. 27, 2020) was supposed to curb billing abuses. The KHN link has an exhaustive analysis of the problem, but it doesn't say whether Mr. Knight's trip to the ER was before or after the effective date of the new law. (And the Richmond Times-Dispatch link didn't work for me; I've included it here in case it works for you.) 

 

Free Webinar: Pres. Biden's First 100 Days of Health Policy

This looks like a good webinar:

Boston University's Center for Health Law, Ethics & Human Rights faculty discuss the first 100 days of President Biden’s term:

• Executive Orders,
• proposed bills, and
• other steps to tackle COVID, climate, and economic crises affecting health.

What has happened? What comes next? 

Thursday, March 11, 2021
1:00 - 2:30 p.m. EST

SPEAKERS
George Annas
Nicole Huberfeld
Wendy Mariner
Michael Ulrich

JOIN ZOOM MEETING
https://bostonu.zoom.us/j/93372687004?pwd=NXpoNm5wZW1YOEljeENyeWY2V3dVUT09

Meeting ID: 933 7268 7004
Passcode: 331167

"HHS Misused Millions of Dollars Intended for Vaccine Research, Emergency Preparedness" (HHS Special Counsel Report, 1/27/21)

 

This is distressing, both because the practice of siphoning these funds away from their intended use thwarts the intent of congressional appropriators and because the practice apparently started in the Obama administration. The generic issue of moving funds around from program to program is, of course, much older and more widespread than this one fund and the ten years that its funds have been raided. The first paragraph of the Special Counsel's news release tells the story:

​The U.S. Office of Special Counsel (OSC) today sent letters to the President and Congress alerting them that, over the last decade, the U.S. Department of Health and Human Services (HHS) misappropriated millions of dollars Congress intended to fund vaccine research and emergency preparedness for public health threats like Ebola, Zika, and COVID-19. A whistleblower alerted OSC to the misuse of funds appropriated to the Biomedical Advanced Research and Development Authority (BARDA) within HHS. OSC referred the allegations for investigation by the agency, which was conducted by HHS's Office of Inspector General (OIG). The investigation substantiated many of the allegations, finding that since at least fiscal year (FY) 2010, the Office of Assistant Secretary for Preparedness and Response (ASPR) misused funds appropriated for BARDA and failed to accurately report this mismanagement to Congress.  

The report contains evidence that ASPR used BARDA's research funds to pay for myriad unrelated expenses, including the removal of office furniture, administrative expenses, news subscriptions, legal services, and the salaries of personnel who did not work for BARDA. The report reveals that the practice of using BARDA funds for non-BARDA purposes was so common, there was even a name for it within the agency: “Bank of BARDA." HHS OIG determined that ASPR had “violated the Purpose Statute" and “potentially violated the Antideficiency Act."

How much money are we talking about here? Potentially a lot (except half a billion dollars in the scheme of the federal budget may not seem like much):

While the report does not contain a specific estimate for total funds misappropriated, it contains evidence that as recently as FY 2019, approximately $25 million was taken from BARDA's Advanced Research and Development (ARD) programs and improperly provided to ASPR. Moreover, from FY 2007 to 2016, ASPR's reporting to Congress failed to account for $517.8 million in administrative expenditures. The report found that “ASPR is unable to demonstrate that the[se] BARDA funds were used for their appropriated purposes." 

It is fairly common to move funds from one small program that no one cares that much about to another program that is facing a budget shortfall -- not any less illegal, but it is done. But this raid on the "Band of BARDA" hit the programs -- vaccine development and emergency preparedness -- that are central to the health of the public right now. I think this is a story that isn't going away anytime soon.