Last year, HHS finalized changes to the Medicaid and CHIP managed care regulations to modernize and streamline program rules for the first time in over a decade. Nearly 9 in 10 children enrolled in Medicaid/CHIP get their care through some type of managed care arrangement, so we teamed up with NHeLP to review the rules and look at what they would mean for children and families.
The rule touched on nearly every part of Medicaid and CHIP managed care, with some regulatory changes taking effect before others. CMS issued a reference guide showing the implementation dates for each provision, based on a future date or contract cycle. Many provisions took effect immediately or within 60 days of publication, with the next crop of provisions taking effect no later than the rating period for contracts starting on or after July 1, 2017.
But on June 30, 2017, CMCS issued an Informational Bulletin regarding the July 1, 2017 compliance dates, saying that they would delay most of the July 1 effective dates by using “enforcement discretion.” The bulletin refers back to a March 14 letter that described CMS’ intent to review the managed care regulations in their entirety. Though that process is not yet underway (publically at least), the agency is still changing the final rule through this bulletin by delaying enforcement. CMS identifies certain provisions for which they are “unable to permit flexibility,” so states must still comply with 6 payment-related sections (some of the actuarial soundness and medical loss ratio (MLR) provisions) as planned. States are invited to identify any or all of the other 28 sections that they are unable to implement by July 1 in order to avoid any related enforcement actions. Importantly, there is no requirement to comply by a date certain – it is left open to “state-specific facts and circumstances.”
Fans of the Administrative Procedures Act (APA) may find themselves scratching their heads. Can an agency selectively delay enforcement of a final rule? If so, does it require first going through notice and comment rulemaking?
Interestingly, the US Court of Appeals for the DC Circuit just weighed in on this very point in a case about air pollution (Clean Air Council v. Pruitt). Like HHS, the Environmental Protection Agency (EPA) finalized a rule last year establishing safeguards to prevent air pollution from oil and natural gas facilities. And like HHS, the EPA issued a letter earlier this year describing its plans to reconsider the final rule. And also like HHS, the EPA followed its letter with a formal decision to delay implementation of certain provisions in the rule. The DC Circuit Court did not look kindly on this decision. In fact, the Court reversed the EPA’s decision because the EPA failed to follow the APA.
Might the same happen for HHS? Both HHS and the EPA are subject to the APA. The APA governs the way in which administrative agencies of the federal government propose and establish regulations. Regulations are issued to carry out legislation enacted by Congress, and they have the force of law. The APA sets out the process agencies must follow, like notice and comment rulemaking, which allows the public to review and comment on proposals before they are finalized. After going through notice and comment and finalizing the rule, agencies may not alter it without going back through the notice and comment process.
Sounds straightforward enough, but in the Clean Air Council case, another law comes into play. Under the Clean Air Act, the EPA must reconsider a final rule if there is an issue of central relevance that was impracticable to raise during the comment period. The EPA relied on this requirement in delaying its rule, but the DC Circuit Court found that the standard was not met and therefore the APA applied. The EPA must go back through notice and comment before changing the effective dates of the final rule.
I am not aware of any special rules in the Social Security Act that would allow HHS to avoid the APA’s requirements. In my view, the provisions of the final rule must be enforced until CMS goes through notice and comment and finalizes a new rule. But until someone with the right authority weighs in, the fact of the matter is that HHS will delay enforcement of its final rule in states seeking such a delay.
Delaying enforcement has real implications for children and families. Among the 28 provisions are some that we highlighted as critical for consumer protections like easy-to-understand enrollee handbooks and provider directories, care coordination requirements, quality assessment and performance improvement programs, and changes to the grievances and appeals processes. There are also important program integrity provisions that may go unenforced such as posting plan contracts to the state’s website and inspecting records and facilities.
But by delaying enforcement CMS doesn’t actually change the law. Could beneficiaries, providers, or health insurers sue the state for failing to comply? We’ll explore the implications of the delay for states next, so stay tuned. In the meantime, which provisions has your state decided to put off? For how long?
