Publications & Presentations
January 23, 2017
From Inside Health Policy

by Michelle M. Stein

The Trump administration instituted a regulatory freeze on Jan. 20 that requires federal agencies not issue any new regulations or guidance documents, pull back any regulations or guidance under review by the Office of the Federal Register, and temporarily postpone regulations and guidance that have been published but have yet to take effect. However, the Congressional Research Service in a legal memo obtained by Inside Health Policy notes that it isn't clear whether an agency like CMS would need to go through the notice-and-comment process before delaying the effective date of a rule that has been finalized but not yet implemented.

CMS had three outstanding rules under review by the Office of Management and Budget a few days after the White House memo was released, according to OMB's website. These are: a proposed rule on Medicaid Supplemental Payment and Accountability, a final rule on program integrity enhancements to the provider enrollment process, and an interim final rule on preexisting condition insurance plan program updates. The preexisting condition insurance plan program rule has been under review by OMB since February 2015. The 340B so-called “mega-guidance” was also listed as under OMB review.

CMS final rules that have been in the Federal Register but not yet implemented include rules on the use of new or increased pass-through payments in Medicaid, conditions of participation for home health agencies and pay bundles for cardiac care and joint replacement, as well as an HHS rule on Medicare appeals.

The White House's Jan. 20 memo asks the heads of executive departments and agencies to take a number of steps to freeze regulations and guidance so that the new president's appointees or designees have the chance to review them. Regulations and guidance subject to statutory or judicial deadlines should be excluded from the regulatory freeze, the memo says.

One of those steps includes not sending any new regulation to the Office of the Federal Register until a department or agency head appointed by the president reviews and approves the regulation. The exception to this is if a regulation or guidance touches on “emergency situations or other urgent circumstances relating to health, safety, financial or nation security matters,” the memo says.

Regulations that have been sent to the Office of the Federal Register but not published should be immediately withdrawn and reviewed by the administration, the memo states.

Final rules that had been published by the Office of the Federal Register but have yet to take effect should be temporarily postponed, the memo says.

“With respect to regulations that have been published in the OFR but have not taken effect, as permitted by applicable law, temporarily postpone their effective date for 60 days from the date of this memorandum, subject to the exceptions described in paragraph 1, for the purpose of reviewing questions of fact, law and policy they raise,” the memo says. “Where appropriate and as permitted by applicable law, you should consider proposing for notice and comment a rule to delay the effective date for regulations beyond that 60-day period.”

The memo also says that in cases where the effective date of a rule has been delayed to review questions of fact, law or policy, agencies should consider proposing notice-and-comment rulemaking. If regulations raise substantial questions, the memo says agencies should notify the OMB director and “take further appropriate action.”

Julius Hobson, senior policy adviser with Polsinelli, said that while the regulatory freeze was expected, it still adds some uncertainty for stakeholders who are in “wait and see” mode regarding what actions CMS will take under the new administration.

A Congressional Research Service memo released two days before Trump's inauguration notes that it's common for a new president to impose an executive branch-wide freeze on regulations under development, but it's not certain whether a notice-and-comment process is necessary to delay final regulations that aren't yet in effect.

“While it is generally recognized that an agency has the authority to immediately halt agency rulemaking activities on rules that are not yet finalized...it is much less clear whether an agency may delay the effective date of a rule that has already been finalized, but is not yet effective, without first engaging in the notice and comment process,” the CRS memo says. “Nevertheless, because the implemented delays in effective dates are typically short in duration, only a handful of courts have evaluated the legality of these actions.”
CRS says that court decisions on the subject have been difficult to harmonize, in that one suggests a temporary delay of a rule's effective date is subject to notice and comment while another does not.