Center on Budget & Policy Priorities Issues Public Comment on HHS Proposed Rule

WASHINGTON, Dec. 16 -- Jessica Schubel, senior policy analyst at the Center on Budget and Policy Priorities, has issued a public comment on the Department of Health and Human Services proposed rule entitled "Securing Updated and Necessary Statutory Evaluations Timely". The comment was written on Dec. 3, 2020, and posted on Dec. 8, 2020:

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Thank you for the opportunity to comment on the Department of Health and Human Services' (HHS) "Securing Updated and Necessary Statutory Evaluations Timely" (SUNSET) proposed rule.

The Center on Budget and Policy Priorities (CBPP) is a nonpartisan research and policy organization based in Washington, D.C. Founded in 1981, the Center conducts research and analysis to inform public debates and policymakers about a range of budget, tax and programmatic issues affecting individuals and families with low or moderate incomes. CBPP staff have deep expertise on the Medicaid, SNAP, and TANF programs, including each program's rules, how they work in the states, and the extensive research on the impact these programs have had on low-income individuals and families. We work closely with states, advocates, and health care providers across the country, providing technical assistance and other support to ensure that Medicaid and other programs work as effectively and efficiently as possible to meet the needs of low-income individuals and families.

Generally, we support measures that periodically review existing regulations to increase transparency, accountability and administrative efficiencies. But despite its purported intent the proposed rule would do just the opposite. It would create significant, unwarranted administrative burden for HHS, wreaking havoc across a broad swath of HHS agencies, including the Centers for Medicare & Medicaid Services, the Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC), and harming millions of people without any pay-off in increased transparency and accountability. Moreover, the rule is unnecessary given HHS already has authority to periodically review and update its regulations when necessary, and regularly does so.

In addition to the proposal's obvious flaws, the truncated 30-day comment period provides insufficient time for full analysis and consideration of the proposal's far-reaching consequences. Accordingly, we urge HHS to immediately withdraw the proposed rule.

Implementation of the proposed rule would be administratively burdensome.

HHS asserts in the preamble that the SUNSET rule will promote "accountability, administrative simplification [and] transparency," but the proposal doesn't advance these objectives. Instead, the proposed rule would require substantial time and resources to implement, first, requiring an initial assessment of an existing regulation to determine whether it significantly affects a substantial number of "small entities," and if so, requiring review of the regulation to determine whether it should be continued, amended or rescinded. This would require significant resources and funding while providing little or no benefit to the large number of people and other entities HHS rules affect.

The two-step assessment and review process would be no simple exercise especially given the multiple factors HHS staff would have to consider during the review step. HHS itself estimates that it would have to conduct over 2,400 assessments in the first two years of implementation. The proposed rule would also be costly, with HHS estimating that the new review procedures would require 90 full-time staff, costing up to $26 million over ten years, to implement. However, these estimates likely underestimate the time and money involved in the review process, and do not accurately account for complications that may arise.

If finalized, the rule would require substantial agency staff time to implement, diverting key resources from responding to the COVID-19 crisis, other agency priorities as well as day-to-day program administration. Without additional funding from Congress, HHS staff would struggle to complete the time-consuming review process to ensure that key regulations don't expire and at the same time effectively administer HHS programs and deal with the national COVID-19 crisis.

The proposed rule would wreak havoc across HHS programs and harm consumers

Regulations play an important role in implementing HHS policies and programs. The proposed rule would undermine Medicaid, Medicare, the marketplaces, and other core functions of government, such as FDA and CDC operations. Undermining these key health programs could harm the over 75 million people who rely on Medicaid for health coverage and the millions of Americans affected by COVID-19.

A strong regulatory framework is necessary for proper administration of HHS programs, but the SUNSET rule would adversely affect HHS' ability to focus on program administration. Under the proposed SUNSET rule, important regulations implementing the Affordable Care Act as well as updates to other provisions of Medicaid would be at the front of the line for assessment and review as they are approaching their ten-year anniversaries.

These regulations would need to be reviewed within the next two years, or else expire. But the underlying statutory framework would still be in place even if the rules expire, leaving states, health care providers, managed care organizations and other entities without guidance on how to properly implement the Medicaid statute.

For example, the Medicaid statute allows states to impose cost-sharing on certain beneficiaries, but the cost-sharing regulations specify the nominal cost-sharing amounts that states can charge as well as other implementation requirements, including important beneficiary protections. Another example is how multiple insurance affordability programs including Medicaid and CHIP rely on regulations at 42 C.F.R. Sec. 435.603 to determine financial eligibility using Modified Adjusted Gross Income (MAGI) methodologies. If this regulation were to simply disappear, programs would be free to redefine MAGI household and income counting rules, with no standards, consistency, or accountability. Without these rules, states would no longer have clear guidance on how to properly administer their Medicaid programs, potentially harming millions of people with low incomes.

The SUNSET rule poses several dangers, but one of the biggest is that important regulations may be arbitrarily rescinded because there are simply not enough HHS staff or other resources to undertake the sweeping, two-step review process proposed by the SUNSET rule. Regulations that do not complete the complicated and time consuming review process would expire, potentially leaving vast, gaping holes in the regulatory framework implementing HHS programs and policies and harming the millions of people who rely on those programs.

The proposed rule is unnecessary and lacks authority to propose automatic expiration dates

The proposed SUNSET rule asserts that automatic expiration dates give HHS the incentive necessary to conduct regular assessments of existing regulations and comply with the Regulatory Flexibility Act (RFA). The RFA requires each agency to publish "a plan for the periodic review of the rules issued by the agency which have or will have a significant economic impact upon a substantial number of small entities." However, nothing in this forty year-old law authorizes agencies to retroactively impose a blanket expiration date to rescind duly promulgated regulations.

HHS already annually reviews and updates existing regulations when it is necessary to do so. For example, CMS annually reviews and updates the Notice of Benefits and Payment Parameters for marketplaces and the Basic Health Program's funding methodology to update requirements based on new information and data. CMS also annually reviews and updates certain Medicare regulations to reflect policy and technical changes and new program parameters.

HHS agencies also commonly update their regulations when needed. For example, in 2002, CMS promulgated new regulations implementing statutory changes to Medicaid managed care. In 2015, CMS issued a rule proposing to update and modernize Medicaid managed care regulations. CMS took nearly a year to review and consider the 875 comments submitted, publishing the final rule in May 2016. In fact, this administration undertook further rulemaking to revise Medicaid managed care regulations, recently finalizing a rule that reverses some of the beneficiary protections added during the 2015 and 2016 rulemaking process.

The requirements proposed in the SUNSET rule are inconsistent the Administrative Procedure Act's (APA) requirements for rulemaking. In the APA, Congress established clear procedures and standards for agencies seeking to modify or rescind a rule. The APA requires agencies to go through the same rulemaking process to revise or rescind a rule as they would for a new rule, with public notice and the opportunity to comment.

HHS asserts it has authority under the APA to add end dates, or conditions whereby a previously promulgated rule would expire. While we do not dispute that federal agencies can amend existing regulations, the SUNSET rule proposes to modify thousands of separate, distinct rules across HHS in a single stroke. HHS' attempt to apply a blanket amendment to 18,000 regulations violates the APA's requirements that review of an existing rule take place on an individual basis, requiring specific fact-finding relevant to the individual rule that the agency wants to amend.

HHS' contention that it needs to "incentivize" regulation review by imposing a mandatory rescission is not supported by the facts. Moreover, the SUNSET rule would, ironically, likely impede HHS efforts to meaningfully update regulations where needed, since it would force HHS to devote staff time to the unnecessary reviews it would mandate.

Conclusion

Transparency, accountability and administrative simplification are important goals in the implementation of laws and policies, especially those affecting health and well-being. However, HHS' proposed rule would not achieve these goals, but instead add confusion, uncertainty, and administrative burden to HHS program administration and the rule-making process. The rule is unnecessary, would provide little or no benefit to consumers, states, health care providers and other stakeholders. It could wreak havoc across HHS programs and harm consumers. At the very least, it would distract HHS staff from critical issues including responding to COVID-19 to undertake this time-consuming review process. If HHS is serious about its stated objectives, it should withdraw this ill-considered proposed rule.

Thank you for the opportunity to share our views. Please contact me at [email protected] if you would like additional information.

Sincerely,

Jessica Schubel

Senior Policy Analyst

Center on Budget and Policy Priorities

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The proposed rule can be viewed at: https://beta.regulations.gov/document/HHS-OS-2020-0012-0001

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