HHS “Good Guidance” Rule:  Not so Good for Medicaid and CHIP

The Centers for Medicaid and CHIP Services (CMCS) recently issued a letter to State Medicaid Directors laying out ways in which state Medicaid agencies can advance value-based care. The 33-page SMD includes numerous references to requirements that states must meet if they want to implement VBP approaches, such as “states must have claims systems that allow them to track individual providers who receive advanced payments and those providers’ individual claims” and “states will have to attest to CMS that there is no duplication of payments.” So far, so good.

But wait!  There’s more.  At the bottom of page 33, under the cc’s, is the following:

“The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically incorporated into a contract. This document is intended only to provide clarity to the public regarding existing requirements under the law. ” (Italics in original).

Huh?  CMCS issues a 33-page SMD explaining to state Medicaid directors what options they have for implementing VBP arrangements under CMCS’s reading of federal Medicaid law but the contents “do not have the force and effect of law”? They are not “meant to bind the public in any way”? If the requirements set forth in the SMD don’t have any legal force or effect and aren’t meant to bind state Medicaid programs that implement VBP, what is the point of the SMD?

Here’s the back story.

On October 9, 2019, the President signed Executive Order 13891.  The EO states that “it is the policy of the executive branch, to the extent consistent with applicable law, to require that agencies treat guidance documents as non-binding both in law and in practice, except as incorporated into a contract….”  To this end, the EO directs each agency to “review its guidance documents and, consistent with applicable law, rescind those guidance documents that it determines should no longer be in effect.”  Those guidance documents that remain in effect must be posted on an agency website established for this purpose which “shall note that guidance documents lack the force and effect of law, except as authorized by law or as incorporated into a contract.”  Finally, the EO directs each agency to promulgate regulations that “set forth processes and procedures for issuing guidance documents.”

On October 31, 2019, the Office of Management and Budget (OMB) issued Memorandum M-20-02 directing all federal agencies, including the Department of Health and Human Services, to publish regulations implementing the EO by April 28, 2020.  In the middle of August, HHS published proposed “Good Guidance” regulations to implement the EO.  Six days later, it published a correction.  The deadline for comments was September 16, giving the public only 21 days (including the Labor Day holiday) to comment. On extremely short notice, the National Health Law Program made a valiant effort to alert the public to the issuance of this proposed rule and its implications for Medicaid and implementation of the ACA.  (Georgetown CCF’s comments are here.)

But wait!  There’s even more.

The proposed regulations require that all “guidance documents” either be rescinded or be posted in a proposed “guidance repository” by November 16, 2020.  The proposed regulations further provide that the guidance repository will include the caveat that any “guidance documents” that are not rescinded and are instead put into the repository “lack the force and effect of law, except as authorized by law or as specifically incorporated into a contract.”

As it happens, HHS has already set up a Guidance Portal.  Who knew? Certainly not anyone who read the proposed regulation or its preamble, which does not mention it.

As of September 23, the Portal is a repository for 28,240 documents, including 17,671 issued by CMS and 3,147 that contain the keyword “Medicaid.”  Front and center on the Portal is the following disclaimer: “Please note, the contents of this database do not have the force and effect of law and are not meant to bind the public in any way. These documents are intended only to provide clarity to the public regarding existing requirements under the law or HHS policies.”

In case anyone misses the point, this language is repeated for each guidance document in the Portal.  Apparently the absence of legal force and effect cannot be stressed too much.

What, one might ask, is the point of seeking public comment on a proposal to do something that the agency has already done?  (The guidance Portal cites the EO as the authority for its establishment).  Never mind.  Let’s talk about what’s at stake.

As loyal fans of Say Ahhh! Blog well know, Medicaid and CHIP are the source of health insurance coverage for 36 million children, whom are disproportionately children of color.   How effectively the Department and the states administer these programs matters enormously to the health and well-being of these children.  And the ability of the Department to administer Medicaid effectively depends in part of its ability to communicate policy to state Medicaid agencies, providers, managed care plans, and other stakeholders through means other than formal regulations adopted through notice-and-comment rulemaking.

Since the beginnings of Medicaid over half a century ago, the Department has used subregulatory guidance to help it and the states administer the program.  This guidance has grown over time, from Supplement D of the Handbook of Public Assistance in 1966 to the many forms it takes today:  State Medicaid Director Letters, State Health Official Letters, Informational Bulletins, Frequently Asked Questions, Fact Sheets, EPSDT Guide for States, Medicaid Drug Rebate Program Notices for Participating Drug Manufacturers, Managed Care Rate Development Guides, PERM Corrective Action Plan Template Instructions, Medicaid Enterprise Certification Tookits, NCCI Manuals (Policy, Technical Assistance, Language Correspondence), and on and on.  Evidently, 3,147 of these documents are in the Guidance Portal, do not have the force and effect of law, and are not meant to bind the public in any way.

It is simply not possible for the CMS or the states to administer the $650 billion (federal and state) Medicaid program that affects 67 million Americans in 56 different states and territories without the ability to use subregulatory guidance.  This point seems obvious.  It is not obvious to the authors of EO 13891 or, judging from the Guidance Portal, the Department.

Consider the confusion going forward.  As a recent MACPAC letter to the Secretary thoughtfully explains, it would be extremely useful to state Medicaid agencies (and providers and plans and beneficiaries) if the Department were to issue guidance explaining how states should unwind the changes made during the COVID-19 public health emergency.  The Department does not have a great track record of responding to MACPAC requests, but should it decide to do the right thing and issue guidance, that document will, under the disclaimer, be of no legal force and effect and will not be meant to bind the public in any way.   How will state agencies—or, for that matter, any other stakeholders or the public at large—make any sense of this?

There may be a silver lining in this cloud.  Among the documents that no longer have the force and effect of law and are not meant to bind the public in any way is the January 11, 2018 Medicaid work requirements SMD.  Here’s hoping that the Supreme Court, which is now considering whether to review the DC Circuit Court of Appeals decision striking down the Secretary’s approval of the Arkansas waiver, takes note.

Similarly, Tennessee, which has submitted a proposal for a Medicaid block grant, may want to reconsider the Department’s authority to approve its request, since the Department has declared that the January 20, 2020 Medicaid block grant SMD has no legal force and effect of law.

This is no way to run a Department, much less a program as important as Medicaid.

[Editor’s Note: The Georgetown University Center for Children and Families submitted these comments on the proposed “Good Guidance” regulations.]

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.