November 18, 2020

Health and Human Services Proposes Federal Rules That Could Sunset Many Health Regulations

Holland & Knight Healthcare Blog
Shannon Britton Hartsfield
Healthcare Blog

On Nov. 4, 2020, the U.S. Department of Health and Human Services (HHS) published a notice of proposed rulemaking and proposed regulatory changes that would, effectively, cause many federal healthcare regulations to disappear unless HHS reviews them at least once every 10 years.

The proposed rule is rooted in the Regulatory Flexibility Act, which was passed by Congress in 1980 to avoid unnecessary regulatory burdens on small businesses. This proposal would require HHS to assess which of its regulations are subject to the Regulatory Flexibility Act. A rule is subject to the Regulatory Flexibility Act if it is determined to have a significant impact on a substantial number of small entities. Under the proposed rule, those regulations subject to the Act will expire either 10 years after the regulation has become effective, or 10 years after the year HHS last "reviewed" the regulation, whichever is later.

The proposed rule defines "review" as a process conducted by HHS that determines whether the regulations at issue should be continued without change, or whether they should be amended or rescinded. Rules that are not reviewed within the requisite time period shall expire, or "sunset." Rules that expire would need to be promulgated again to have effect. Therefore, HHS would need to review each of its regulations at least once every 10 years. Moreover, the proposed rule requires that all current HHS regulations subject to the Act be reviewed within two years, or else the regulation at issue shall sunset.

HHS Chief of Staff Brian Harrison stated that the rule is "the boldest and most significant regulatory reform effort ever undertaken by HHS." HHS estimates it will have to assess roughly 2,200 regulations in the first two years and approximately 125 per year thereafter. HHS estimates it will take between 6,600 and 22,000 hours to review regulations in the first two years alone and that the total cost of implementing the proposed rule will be between $10 million and $25.8 million.

The endeavor would be time-consuming and costly. Ultimately, HHS maintains thousands of regulations on its books, and each will first need to be assessed to determine if the Regulatory Flexibility Act applies such as to necessitate a review. Furthermore, as it is unclear how many, if any, regulations would be amended or rescinded, the benefit of the proposed rule is unclear. The proposed rule arguably may increase regulatory complexity, requiring those subject to HHS regulations to keep track of which regulations are still intact. This could create a regulatory environment subject to near-constant change. Moreover, if HHS is unable to meet the onerous review deadlines, automatic sunset of HHS regulations may lead to lack of clarity regarding legal standards, which could be harmful to the healthcare system, as healthcare entities will have to devote significant resources to determining their compliance responsibilities. Additionally, in the notice of proposed rulemaking, HHS indicates that the public may need to "remind [HHS] to conduct the Assessment or Review" if HHS has not announced an assessment or review and the deadline is nearing. This may require regulated entities to establish systems to monitor the HHS deadlines and submit the reminders via an HHS website.

The notice of proposed rulemaking is subject to a 30-day comment period and is due Dec. 4, 2020, though comments regarding the proposed rule's revisions to 42 CFR parts 400-429 and parts 475-499 are subject to a 60-day comment period.

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