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David McGill Blogger

Supreme Court Expands Agencies' Authority

Posted by David McGill | March 17, 2015

Last week the Supreme Court issued its decision in Perez v. Mortgage Bankers' Association. While the case didn't directly involve Medicare, the ​decision potentially grants that agency and its contractors more authority than they previously possessed.

Here are the three key aspects of the Perez case:

  • The Administrative Procedures Act gives government agencies the right to issue rules in two separate ways: (1) via public "notice and comment," and (2) by issuing interpretive guidance, which does not require public notice and comment.
  • The D.C. District Courts had issued a line of decisions requiring public notice and comment for purely interpretive guidance when that guidance "deviates significantly from a previously adopted interpretation."
  • The Supreme Court overturned the D.C. caselaw precedent, holding that interpretive guidance is not subject to public notice and comment, even when that guidance does deviate significantly from previous interpretations.

The Supreme Court's decision potentially expands the authority of agencies like the Department of Labor and Medicare to issue new rules without first requiring public notice and comment. As a result, it may strengthen Medicare's ability to unilaterally issue "interpretive guidance" regardingpolicies like the Local Coverage Determinations for both orthotic and prosthetic items. This is troublesome insofar as Medicare and its contractors have already demonstrated their willingness to publish important guidance without seeking public input first. The Perez decision may onlyfurther embolden them.

What does this mean for you?

We want to highlight 3 takeaways as a result of the Supreme Court's decision.

First, challenges to CMS's/the MACs'/PDACs' guidance regarding Medicare coverage and payments policies likely became more difficult as a result of Perez. At a minimum, Medicare and its contractors can now argue that their unilateral actions fall within Perez's protections, giving them yet another defensive tool in their arsenal. For example, the decision may provide Medicare/the MACs further justification for their current approach to limiting who can provide "custom-fit" orthoses.

Second, the decision could lead Medicare and its contractors to become even more aggressive in issuing "interpretive guidance" in the future. By broadly labelling​ guidance as interpretive, Medicare could potentially expand its ability to issue new rules while end-running the Administrative Procedures Act's notice and comment requirements.

Third, your continued ability to operate will increasingly depend on your company's capacity to comply with Medicare coverage and payment policies, all of which are increasingly likely to withstand outside attack thanks to the Perez decision. You need to comprehensively understand the Local Coverage Determinations for all your orthotic and prosthetic claims. You need to make sure that you do not submit claims for these items until you have satisfied the LCDs' requirements. And you need to stay on top of all changes in Medicare policy ​as they happen, especially since the MACs have shown a willingness to issue policy changes that apply retroactively. This requires you to devote material resources to your internal processes, or alternatively, to rely on external experts for support. 

Ossur R&R is a great way to stay on top of breaking news. And our strategic partner, The Audit Team, can provide you cost-effective external support. Whatever you do, you can be sure that the practices that made you successful in 2010 will no longer be effective in 2015, so take the steps necessary to protect your business.

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