Telehealth, PBM, AI bills may stall after Supreme Court ruling

The post-election healthcare package Congress is slowly constructing has encountered a Supreme Court complication.

The prospects of combining a slew of healthcare measures affecting providers, insurers, pharmacy benefit managers and technology companies by the end of the year dimmed Friday, when the high court overturned a longstanding legal precedent that gave federal agencies wide latitude to interpret laws.

Even broadly supported bipartisan goals such as setting limits on artificial intelligence in healthcare, expanding telehealth and curbing pharmacy benefit managers will require second looks and perhaps new agreements, in certain cases, between Republicans and Democrats to restore some of the executive branch authority the Supreme Court took away.

The 6-3 Supreme Court decision in Loper Bright Enterprises v. Raimondo massively changes how laws will be written and executed from now on by weakening regulatory authority and strengthening the power of courts to decide policy matters. The ruling abrogated the so-called Chevron deference that courts were expected to give regulatory actions under the 40-year-old Chevron v. Natural Resources Defense Council decision.

Congress retains its right to make new laws, but can no longer leave the particulars to federal agencies. Lawmakers will have to be more careful and precise when crafting legislation that agencies would implement and enforce.

Providing such granular detail can be difficult for Congress, both politically and practically, but members will have to confront this new reality as they assemble a package of healthcare bills they want to send President Joe Biden during a lame-duck session after Election Day.

Related: How the Supreme Court’s regulation ruling will change healthcare

Congress is eyeing a handful of healthcare items essentially seen as must-pass. They include renewing policies to keep hospitals and community health centers fully funded and to prevent Medicare physician pay cuts. These provisions are set to expire at the end of the year, and nearly every lawmaker with a healthcare-related bill wants to hitch a ride on the legislation that would tackle those top priorities.

Many of those measures are popular and bipartisan, including legislation to extend the authority for telehealth and hospital-at-home services, demand transparency in many corners of healthcare, stiffen regulations on pharmacy benefit managers, and introduce rules governing artificial intelligence.

Having to worry about how a judge may interpret the intent of those bills if Congress does not spell out each imaginable future wrinkle presents a major dilemma, said Kaye Pestaina, director of the KFF Program on Patient and Consumer Protection. "That's a real big hurdle — and It's really difficult with healthcare," she said.

"It's going to be a huge challenge for Congress to be technical enough and build in enough flexibility for agencies to be able to react to changing situations, and craft the kind of regulations that scientists and experts want to craft," said Lisa Gilbert, executive vice president of the liberal consumer advocacy organization Public Citizen.

Congressional aides, who spoke on background to candidly discuss how thinking in Congress is developing, said many on Capitol Hill are aware of the general issue, but have just begun to consider its implications. Lawmakers and staffers are not yet sure how to approach specific bills, they said.

One relatively easy solution would be for Congress to simply write into legislation that agencies have the authority to use their expert discretion, aides said.

That may work for measures such as the telehealth and PBM legislation, which have support from Republicans and Democrats who want to come to terms and make law. But under the new Supreme Court standard, even that could trigger judicial interventions, Pestaina said.

"In theory, Congress could do more of that. Say, 'Okay, the department of whatever will tell us what X and Y means,'" Pestaina said. "Of course, those will be subject to challenge without deference."

Moreover, altering legislation in anyway after it's already been negotiated is a dicey proposition. Bigger, more novel measures Congress may want to advance would be even more difficult to put together.

Take AI, for example. Lawmakers are under pressure to set guardrails on how this rapidly evolving and suddenly ubiquitous technology should be used in healthcare.

While lawmakers have proposed a few specific AI measures, many have been looking to start with a broad-based privacy bill. The measure would include provisions ranging from cybersecurity standards to how people can opt out of AI or algorithmic tools used for medical decisions. Although the concept has bipartisan support, an agreement is not certain. The House Energy and Commerce Committee planned to mark up an AI bill last Thursday, but canceled the session amid concerns from members about civil rights impacts.

Now, Congress must anticipate what a judge might think of how the law would be implemented, which adds complexity. In addition, legislators may have to spell out more elements, such as how to measure and respond to the disparate racial impacts of an AI law. Oppositional devils can often emerge along with greater details.

"Certainly, Congress will be more specific. But, of course, we all know that often what gets the compromise is because they have not been specific, and they count on the agency to flesh it out," Pestaina said. "So it hurts the ability actually to come to resolution on a piece of legislation to move forward."

In the case of AI, even absent a broader bill, industry stakeholders are calling on lawmakers to simply grant agencies authority to write rules. Congress still could do that, but, as Pestaina said, no longer with a guarantee that courts would defer to agency experts in lawsuits.

Congress could get itself off the hook by passing a legislative version of Chevron deference, such as the Stop Corporate Capture Act of 2023 that Rep. Pramila Jayapal (D-Wash.) authored and Public Citizen supports, Gilbert said.

But Republicans generally agree with the Supreme Court ruling, making any effort to restore Chevron deference unlikely in the short term. That stance could weaken once GOP lawmakers start seeing their own policies held up in court, however.

"We'll need to see some sort of failures of efficacy for both parties for it to become clear that this is the kind of reform that we need in a bipartisan manner, which isn't an overnight proposition," Gilbert said. "Once people have the realization on both sides of the aisle that it's a necessity, it'll just be a matter of time."

That timeline almost certainly extends past 2024, and those healthcare bills are awaiting action now.

"It's just going to be harder," Gilbert said. "We can just expect that anything that feels like it puts agencies in a place where they're doing something flexible is going to be harder."