A Parting Gift for the Incoming Administration: “Good Guidance Practices”

This week—two weeks before the inauguration of a new President—the self-proclaimed “Good Guidance Practices” regulation issued by the outgoing Secretary of the Department of Health and Human Services (HHS) takes effect. As proposed in August, the regulation was not so good for Medicaid and CHIP. In its final form, published on December 7, the regulation adds even more process burden on both the incoming Secretary and the Department.

In our comments on the proposed rule we urged HHS to reissue its proposal with an explanation of how the “practices” would affect the agency’s ability to administer the Medicaid and CHIP programs. HHS did not oblige. In the absence of an official explanation, here are some answers to Questions about the new regulations that are likely to be Frequently Asked:

What is Medicaid subregulatory guidance and why does it matter?

HHS is responsible for administering the Medicaid and CHIP programs. Among other things, this means making sure that states, providers, managed care plans, beneficiaries, and the public understand the federal policies and procedures that apply. Through the Center for Medicaid and CHIP Services (CMCS), HHS communicates these policies and procedures in two main ways: through (1) regulations, aka rules, which it issues using a formal notice-and-comment rulemaking process; and (2) subregulatory guidance, which does not go through the formal rulemaking process.

The Medicaid regulations are found at Title 42 of the Code of Federal Regulations (CFR) Parts 430 to 456, the CHIP regulations at Part 457. Regulations implement provisions of the federal Medicaid and CHIP statutes in Titles XIX and XXI of the Social Security Act. Properly done, notice-and-comment rulemaking takes a minimum of four to six months from start to finish, and often much longer. As a practical matter, the regulations that notice-and-comment rulemaking produce cannot anticipate all policy and operational issues that states will encounter over time.

To clarify and communicate policies in regulations, CMCS uses subregulatory guidance. Found on the CMCS website, this guidance takes a number of forms, including State Medicaid Director (SMD) Letters, State Health Official (SHO) Letters, CMCS Informational Bulletins (CIBs), and Frequently Asked Questions (FAQs). It is these types of subregulatory guidance, among many others, that will now be subject to the new “Good Guidance Practices.”

What have the Medicaid guidance procedures been?

Based on its ongoing conversations with state Medicaid and CHIP agency staff, CMCS determined when states needed guidance on particular policy or operational issues that did not require formal notice-and-comment rulemaking. CMCS then developed the guidance and posted it on Medicaid.gov, ensuring that the answers to questions were consistent from one state to the next. If the agency needed to update or revise a guidance, it would issue a new version.

What are the new “Good Guidance Practices”?

The new “practices” affect all forms of Medicaid and CHIP subregulatory guidance, including not just SMDs, SHOs, CIBs, and FAQs, but also documents like the annual Medicaid Managed Care Rate Development Guide. Effective January 6, 2021, there is a new process for rescinding current guidance and a new process for issuing new guidance. By ideological design, the process for rescinding guidance is far less burdensome than the process for issuing new guidance. Here’s a brief overview:

All subregulatory guidance must be posted to the HHS guidance repository. Any guidance document not included as of January 6, 2021 is considered rescinded. Any guidance document included as of that date, but removed from the repository any time after that date, is also considered rescinded. HHS does not have to give the public notice when it rescinds a guidance document or explain why it is doing so—not unlike a silent trap door.

Going forward, any subregulatory guidance issued after January 6 has to be posted to the repository. If the guidance is “significant”—i.e., if it (among many other things) would “adversely affect in a material way…State…governments” or “materially alter…the rights or obligations of recipients of [entitlements]”—it must be posted on the repository for a minimum 30-day notice-and-comment period.

All “significant” guidance documents, and most non-significant ones, must be approved by the Secretary “on a non-delegable basis” (presumably in his or her spare time).

Is there more?

Yes, there is. The “practices” include a new bureaucratic process that allows “any interested party” to petition HHS to withdraw or modify any guidance document that has not been rescinded. As of the morning of January 6, the HHS guidance portal contains 38,715 documents, of which 4,762 contain the keyword “Medicaid” and 727 contain the keyword “CHIP.” Outside parties interested in tying up CMCS staff could potentially use this petition process to relitigate each one.

What is the “Good Guidance” disclaimer?

Every guidance document issued by HHS will have to include the following disclaimer: “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.” The only exception is for those documents that are “authorized by law to be binding.”

What does that even mean?

One possible interpretation is: “this document is not legal, so feel free to ignore it.” Another is: “this document is not binding in any way, so feel free to ignore it.” Whatever meaning the disclaimer intends, it can only serve to confuse.

Consider the recently issued 56-page letter to State Health Officials spelling out in great detail the eligibility requirements states will have to meet once the COVID-19 public health emergency is lifted. As my colleague Tricia Brooks has explained, this SHO letter contains “critical” operational guidance that state Medicaid officials need now so they can begin to unwind emergency policies and resume normal procedures—not months from now after notice-and-comment rulemaking can be completed. Because the letter was issued before January 6, there was no need for HHS to determine whether the letter is “significant” and, if so, to post it for a 30-day notice-and-comment period.

But the letter, like any other guidance document, must still carry the disclaimer. It’s right there in footnote 1 at the bottom of page 1. What follows is an extensive discussion requirements and timeframes, punctuated with statements like: “States that do not meet the timelines outlined in this letter will be at increased audit risk and corrective action may be necessary” (p. 22). Which asks the question: should state Medicaid and CHIP officials read the letter and, if so, do they need to follow it?

This is just silly. Will the Biden Administration be able to unwind it?

Yes. There are several paths to Good Governance. Here’s one:

  • Rescind Executive Order 13891, “Promoting the Rule of Law Through Improved Agency Guidance Documents,” signed by President Trump on October 9, 2019, which HHS cites as the basis for its “Good Guidance Practices” rule.
  • Rescind the October 19, 2019 OMB Memorandum directing agencies to implement EO 13891.
  • Rescind the HHS “Good Guidance Practices” rule using the formal notice-and-comment rulemaking process.
  • While the “Good Guidance Practices” rule is being rescinded, remove the January 11, 2018 work requirements SMD and the January 30, 2020 block grant SMD from the HHS Guidance Portal and inform the public that these SMDs have been rescinded.
  • Upon completion of the rulemaking process rescinding the “Good Guidance Practices” final rule, dismantle the HHS guidance portal.

While this unwinding plays out, get back to making government work. There’s a pandemic on.

[Editor’s Note: On January 7, 2021, the Secretary of Health and Human Services extended the PHE  for another 90 days. The extension is effective January 21, 2021 and will last until April 20, 2021.]

Latest