A federal appeals court has approved a volume adjustment payment appeal for a Minnesota hospital, reversing a lower court decision by citing the overturned Chevron doctrine. The case questioned whether the Department of Health and Human Services (HHS) owed the hospital $1.9 million in a volume decrease adjustment due to flawed methodology when HHS determined if the hospital’s Medicare revenue fell short of its unreimbursed fixed costs. The judges’ opinion sided with the hospital saying that the overturn of Chevron doctrine required the court to exercise independent judgment and that HHS’s methodology was inconsistent with the relevant statute. Read more.

This case is among the first to cite the ruling in Loper Bright but will be far from the last. While this judgment is a win for hospitals, it also offers a first glimpse into how agency methodologies may be challenged in post-Chevron courts. As existing federal rules are updated and new rules are drafted, health systems should advocate for clearer and less ambiguous language from Congress and anticipate a shifting regulatory landscape as old rulings and methodologies are challenged in court.