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HHS’ Proposed “Rule on Rules” Could Wreak Havoc on Health Programs and Harm People

The Department of Health and Human Services’ (HHS) proposed “Securing Updated and Necessary Statutory Evaluations Timely” (SUNSET) rule would cause most HHS regulations to automatically expire unless HHS conducts a time-consuming assessment and review of such regulations. If finalized, the proposal would divert key resources from responding to COVID-19; wreak havoc on the administration of Medicaid, Medicare, the marketplaces, and other HHS programs; and potentially seriously harm millions of people.

The SUNSET rule, which the department issued November 4, provides that most HHS regulations will automatically expire after ten years unless HHS first assesses whether a regulation significantly affects a substantial number of “small entities,” and if so, reviews the regulation to determine whether it should be continued, amended, or rescinded.

This would be no simple exercise. The rule requires HHS staff to consider several factors, such as the continued need for and complexity of the rule and whether it overlaps, duplicates, or conflicts with other federal rules. HHS estimates that it would have to assess over 2,400 rules in the first two years of implementation. The 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.

Moreover, the rule would distract the Biden Administration from critically important priorities that it must address, especially COVID-19. It would disrupt work on program operations and force the Administration to delay adopting its health care priorities because it needed to redirect staff to review existing regulations. If HHS could not dedicate the needed resources to conduct the assessments and reviews, some rules might expire and cause major harm. The expiration of Medicaid regulations, for example, could make it hard for states to properly administer their Medicaid programs, potentially harming millions of people.

The SUNSET rule is also unnecessary. HHS already periodically reviews and updates its regulations. For example, it annually reviews and updates the Notice of Benefits and Payment Parameters for marketplaces to update requirements based on new information and data and, in 2016, HHS modernized the 2002 regulations governing Medicaid managed care to reflect updated practices. Ironically, the SUNSET rule would 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.

The SUNSET rule is the Trump Administration’s latest attempt to sabotage HHS programs and tie the Biden Administration’s hands. Coupled with the “Good Guidance” proposed rule, which targets HHS’ use of sub-regulatory guidance in administrating its programs, the SUNSET rule would make it harder for the Biden Administration to effectively administer HHS programs and respond to critical issues facing the nation. While the Biden Administration could rescind the policy through new rulemaking, that would take time and would also consume resources that could be dedicated to more important priorities.