How The Supreme Court’s Chevron Decision Could Help Stop Home Health Cuts

On Friday, the U.S. Supreme Court upended the Chevron doctrine precedent. For home health industry purposes, that means a potentially weakened Centers for Medicare & Medicaid Services (CMS) moving forward.

The news comes just two days after the home health proposed payment rule was released, which included significant cuts for the third straight year.

Broadly, moving away from the Chevron precedent – usually known as the Chevron doctrine – will mean less regulatory power for government agencies. Government agencies often take their own interpretations of certain laws and statutes, and then act upon those interpretations. Moving forward, it’s likely that these agencies will need more explicit direction from Congress to regulate on firm standing.

The reaction to the Supreme Court decision has mostly been centered around issues like the environment and reproductive rights.

But the decision could also be the breakthrough that home health providers needed to stop – and potentially undo – payment cuts. This week, CMS proposed a 1.7%, or $280 million, decrease to aggregate home health payments for 2025. The final rule is expected in late October or early November.

The National Association for Home Care & Hospice (NAHC) already filed a lawsuit against the U.S. Department of Health & Human Services (HHS) and CMS over rate cuts in 2023.

“In our own analysis, we believe that providers of home health have been underpaid as it relates to budget neutrality,” NAHC President William A. Dombi said when the lawsuit was filed. “At minimum, we would expect to see the rate cuts from 2023, that were permanent readjustments to the base rate, and the one proposed for 2024, along with the temporary adjustments … to go away. The end product of that is that we would have a stable system to deliver home health services to Medicare beneficiaries.”

NAHC has now re-filed that lawsuit, after it was initially dismissed by a federal court.

Even before Chevron was officially overturned, there was evidence to suggest that the Supreme Court was moving away from its line of thinking. The first was in West Virginia v. Environmental Protection Agency (EPA), where the court undercut the EPA’s power in restricting carbon dioxide emissions.

In a health care context, it showed up in American Hospital Association v. Becerra, which was similar to the current NAHC lawsuit.

Like West Virginia v. EPA, the AHA v. Becerra case went the opposite direction of the Chevron precedent.

Prior to 2020, CMS proposed a series of policy changes for hospitals, one of which would have reduced payment, specifically through the 340B drug pricing program. For context, 340B hospitals are generally those that serve lower-income or rural populations.

The 340B cuts represented at least $1.6 billion in lost revenue annually for hospitals.

Like NAHC will with home health cuts, the AHA argued those cuts would hurt patient care, and that CMS did not have the power to levy those cuts in the first place.

In 2022, the Supreme Court ruled unanimously against HHS and CMS in that case. It was later ruled, too, that CMS pay hospitals back for the underpayments, with interest.

“The Supreme Court basically said the law requires certain actions to be taken by CMS in setting the hospital rates as it relates to the 340B, and they had two ways to go. And CMS chose not to go those two ways,” Dombi told HHCN in 2022. “What we’ve got going on in the home health payment rule is a comparable legal argument that starts with the position that the law does not allow CMS to do what it did do on the budget neutrality methodology. And second, that the law requires a specific set of actions, none of which the CMS methodology complies with.”

Home health advocates have lobbied against CMS cuts through public comments during the time between the proposed and final rules. They’ve provided data and storytelling to do so. They’ve also successfully lobbied lawmakers to introduce the Preserving Access to Home Health Act in both the Senate and the House, but that legislation hasn’t moved forward in past years.

A lawsuit was not the desired outcome for NAHC, but one of its last options. Now, that lawsuit may have more wind behind its sails.

“It improves the chances of success for our lawsuit going forward,” Dombi told HHCN Friday, regarding the Chevron decision. “It also means Congress is going to have to offer more detail in its legislative language, leaving less to the administrative agency to bring in interpretations. That, in many ways, is a good thing too.”