The Supreme Court just limited federal power. Healthcare is feeling the shockwaves.

The Supreme Court’s landmark decision, which will limit the power of federal agencies, is expected to have dramatic consequences for the nation’s health care system, challenging government regulations on a range of issues, from consumer protections for patients to drug safety to care in nursing homes.

The June 28 decision overturns a 1984 precedent that courts should show deference to federal agencies in legal disputes over their regulatory or scientific decisions. Instead of giving priority to agencies, courts will now make their own independent judgments about what Congress had in mind when crafting a particular law.

The ruling will likely have seismic consequences for health policy. A flood of lawsuits — with plaintiffs such as small businesses, drugmakers and hospitals challenging regulations they say are not spelled out in statute — could leave the country with a patchwork of disparate health regulations that vary by location.

Agencies like the FDA will likely be much more cautious when crafting regulations, Congress will likely spend more time fine-tuning 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 health systems should prepare for greater uncertainty and less stability in the health care system. Even routine government functions, such as setting the rates paid to doctors to treat Medicare beneficiaries, can become embroiled in lengthy legal battles that disrupt patient care or make it more difficult for providers to comply.

Anti-regulation groups could seek out and secure biased judges to reverse agency decisions, said Andrew Twinamatsiko, director of the Health Policy and the Law Initiative at Georgetown University’s O’Neill Institute. One example is the challenge to the FDA’s approval of an abortion drug that survived a Supreme Court challenge on procedural grounds.

“Judges will be more bold when it comes to agencies that have concerns,” he said. “This will open agencies to attacks.”

The regulations are essentially technical instructions for laws written by Congress. Employees in federal agencies with law-related expertise—for example, in drugs for rare diseases or health care for seniors—decide how to translate Congress’ words into action, with input from industry, advocates, and the public.

Until now, when agencies issued regulations, there was usually one rule across the country. However, after the high court’s ruling, lawsuits filed in more than one jurisdiction could result in conflicting rulings and regulatory requirements — meaning health care rules for patients, providers or insurers could vary significantly from area to area.

For example, one circuit may follow regulations issued by the Centers for Disease Control and Prevention, while other circuits may have different views.

“You can have eight or nine out of eleven different views about the courts,” said William Buzbee, a law professor at Georgetown University.

A court in one district may issue a nationwide injunction to enforce its interpretation while another district disagrees, said Maura Monaghan, a partner at Debevoise & Plimpton. Few cases are decided by the U.S. Supreme Court, which can leave conflicting directives in place for many years.

In the near future, health policy leaders say agencies should brace for more litigation over controversial initiatives. For example, the Affordable Care Act’s requirement that most health plans cover preventive services is already in litigation. Multiple challenges to the mandate could mean different requirements for coverage of preventive care depending on where a consumer lives.

Drugmakers have filed a lawsuit seeking to stop the Biden administration from implementing a federal law that forces makers of the most expensive drugs to negotiate prices with Medicare, a key part of President Joe Biden’s efforts to lower drug prices and control health care costs.

Parts of the health care industry may adopt physician reimbursement rates set by the Centers for Medicare and Medicaid Services because those specific rates are not written into law. The agency issues rules updating payment rates in Medicare, the health insurance program for people 65 and older and younger people with disabilities. Groups representing doctors and hospitals regularly come to Washington to lobby against pay rate cuts.

And providers, including those backed by wealthy investors, have sued to block federal rules on surprise bills. The No Surprises Act, which was passed in 2020 and goes into effect for most people in 2022, is intended to protect patients from surprise bills for out-of-network medical services, especially during emergencies. The Supreme Court’s ruling is expected to spark more litigation over its implementation.

“This will really create a tectonic shift in the administrative regulatory landscape,” Twinamatsiko said. “The approach since 1984 has provided stability. When the FDA or CDC adopts regulations, they know they will be followed. It has been taken away.”

Industry groups, including the American Hospital Association and AHIP, a trade group for insurers, declined to comment.

Agencies like the FDA that use their regulatory authority to make specific decisions, such as granting exclusive marketing rights once a drug is approved, will be vulnerable. The reason: Many of their decisions require discretion rather than being clearly defined in federal law, said Joseph Ross, a professor of medicine and public health at the Yale School of Medicine.

“The legislation that governs most work in the health care sector, such as the FDA and CMS, is not prescriptive,” he said.

FDA Commissioner Robert Califf said last year on an episode of the “Healthcare Unfiltered” podcast that he was “very concerned” about the disruption caused by judges overturning his agency’s scientific decisions.

The Supreme Court ruling will be particularly important for the country’s federal health agencies because their regulations are often complex, creating the opportunity for more heated legal battles.

Cases that may not have been heard in court due to agency deference may now find more favorable outcomes.

“A whole host of existing laws could be vulnerable to attack,” said Larry Levitt, vice president of health policy at KFF.

Other consequences are possible. Congress may try to clarify more details as it develops legislation to avoid challenges — an approach that could increase partisan gridlock and slow the already glacial pace of passing legislation, Levitt said.

Agencies are expected to be much more careful when writing regulations to ensure they do not go beyond the bounds of the law.

The Supreme Court decision, taken by a majority vote of 6 to 3, was overturned Chevron USA vs. Natural Resources Defense Councilwhich said courts should generally uphold a federal agency’s statutory interpretation if it is reasonable. Republicans largely praised the new ruling as necessary to ensure agencies do not overstep their authority, while Democrats said in the wake of the decision that it amounted to a judicial power grab.

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