Recent court rulings have the potential to make significant differences in the landscape of hospice regulatory oversight in coming years, particularly when it comes to audits and the forthcoming Special Focus Program (SFP).

In June the U.S. Supreme Court overturned a ruling that in 1984 established the “Chevron Doctrine,” which instructed lower courts to defer to executive branch agencies to resolve ambiguities in laws passed by Congress. The decision marked the end of the practice known as “Chevron deference,” which required that courts must defer to regulatory agencies’ interpretations of “ambiguous” statutes within federal legislation as long as the enforcement activity is deemed “reasonable.”

The Chevon ruling opens a broad window of interpretation among future court decisions that impact several industries including health care, according to Bryan Nowicki, partner at the law firm Husch Blackwell. Hospices could potentially see a vastly different outlook in regulatory enforcement activity during a time of tremendous changes already taking place in the industry, Nowicki said.

“With Chevron, there was this shift over to administrative agencies with the idea behind that some of these statutes that Congress enacts touch upon very intricate, detailed issues and health care certainly is one of them,” Nowicki said in a recent Husch Blackwell podcast. “There was often a balance of expertise. Now the court is free to take all of these competing proposed interpretations of ambiguous statute and then decide for itself without having its hands tied. We are foreseeing how it’s going to apply to hospice. All the concepts they talk about really have broad application.”

Among the federal statutes that could be open to court interpretation is the Special Focus Program (SFP), which Congress mandated in the Consolidated Appropriations Act of 2021. The legislation contained the Helping Our Senior Population in Comfort Environments (HOSPICE) Act and established the SFP program, which gives regulatory authorities the ability to impose enforcement remedies against hospices with poor performance on regulatory or accreditation surveys, the Hospice Care Index and Consumer Assessment of Healthcare Providers and Systems (CAHPS) scores.

Taking effect in 2025, hospices flagged by the SFP will be surveyed every six months rather than the current three-year cycle. Among the potential enforcement actions for the SFP are monetary fines, suspended reimbursement, appointment of temporary management to bring the hospice into compliance or revocation of a provider’s Medicare certification.

Industry stakeholders, advocacy groups, providers and Congress members alike have urged CMS to reconsider the SFP’s methodology. Concerns have grown around the algorithm could fail to identify poor performers and disproportionately place too much emphasis on potentially flawed data, among other aspects of the program.

To date, CMS has indicated no plans to address the concerns or revamp provisions in the SFP program.

The judge’s decision in the Chevon ruling may pose some complications and questions in future decisions related to the SFP statute, Nowicki indicated.

“If you look at the statute and the regulations relating to it, there’s a bit of a disconnect. Did CMS go too far in interpreting a potential ambiguity in the [SFP] statute to really take it in a different direction?” he said. “To the extent that there is going to be anybody challenging the Special Focus Program, that might be an aspect of it where [the Chevron Doctrine decision] can be brought to bear in state court. This is for [state courts] to decide if CMS overstepped its authority. Just because what CMS did might be reasonable, it doesn’t mean that the court has to let them do that. You can decide for yourself.”

Other regulations in the hospice space may also see potential effects brewing from the Chevron Doctrine’s undoing, according to Meg Pekarske, partner at Husch Blackwell. These include the temporary waivers that allowed for face-to-face recertification of hospice services to be performed via telehealth, set to expire Dec. 31. Though the Chevron ruling doesn’t change the statute, it does allow CMS to create new rules such as revised telehealth regulations, Pekarske stated.

The ruling could also impact other regulatory enforcement activities tied to compliance issues such as documentation errors and condition of payment requirements related to the physician narrative and the hospice election statement addendum rule, she added.

“There’s other things where Congress hasn’t changed the statute but then CMS creates new rules,” Pekarske said during the podcast. “For example, the election addendum or the physician narrative, things that CMS is claiming are conditions of payment are not explicitly in the statute. It is really important to pay attention to what is actually in the statute and the word choice is really important. This is where we get into real nitty things [about] what did Congress actually speak to, versus what is CMS broadly saying.”

The current hospice auditing climate is another area wrought with potential impacts that stem from the case, according to Nowicki.

Hospices have seen auditing enforcement activity ramp up in response to rising program integrity concerns in recent years. Some providers have undergone multiple audits simultaneously, with varying inconsistencies reported among providers as to the various types of regulatory enforcement activity resulting from the activity.

Challenges have come to the forefront in terms of the differences that exist in the scope of data being reviewed by different auditors, as well as the audit appeals approval and denial processes.

The Chevron ruling could have hospices seeing both greater complexities and opportunities when it comes to appealing auditing decisions enforced by CMS, Nowicki stated.

“The real opportunity to take advantage of these kinds of issues is going to come when there’s an audit that is of such magnitude that people are taking the results to federal court, or there’s a class action or an association that decides to really push back on CMS arguably going beyond what the statute authorized them to do and really doing so based on maybe a reasonable interpretation, but not what a court would say is the correct interpretation of the statute,” Nowicki said.