Medicare audit hearings could be in flux after the Supreme Court overturned the Chevron deference, according to an Aug. 21 report from VMG Health.
In June, the Supreme Court overturned the legal precedent known as the Chevron deference, which said that during disputes over regulation of an ambiguous law, judges should defer to federal agency interpretations within reason.
Before Chevron's overturning, administrative law judges relied on Chapter 8 of the Medicare Program Integrity Manual, which offers only a broad overview of using inferential statistics and conducting statistical sampling to estimate overpayments with Medicare audits. This preference, according to the report, was based on the premise that CMS had the expertise to interpret and apply complex statistical methods effectively.
Chapter 8 of the manual only has nine pages regarding statistical models and processes involved, according to the report, and when administrative law judges rely on these nine pages, it "hampers the provider’s ability to mount a compelling defense that challenges the auditor’s methods using widely accepted standards within the statistical community," the report said. The aim of that deference is meant to ensure audit hearings are grounded in a consistent framework.
Overturning of Chevron deference will likely change the running of these administrative law judge hearings. The ruling "will have a significant impact on the financial damages incurred by healthcare providers due to extrapolated overpayment findings," the report said, and will likely create "a more complex and uncertain regulatory environment."
Now that the Chevron deference is no longer in play, administrative law judges will "hopefully scrutinize CMS guidelines more critically," the report said. This could mean methodologies and assumptions used by CMS for statistical sampling and overpayment estimation could be seeing more rigorous judicial review.
Additionally, administrative law judges will no longer favor CMS' interpretations of Chapter 8, but also evaluate them alongside expert testimony. With this, there is an increased incentives for providers to find highly qualified experts who can challenge CMS' statistical approaches
The downside, according to the report, is that judicial rulings may be inconsistent without agency interpretations of ambiguous statutes and courts could interpret regulations differently, leading to "regulatory requirements across different jurisdictions."