Health care lawyers are familiar with the term “underground rulemaking,” which refers to efforts by federal agencies to impose obligations on providers and suppliers informally, without using the processes required by law. That issue has recently attracted the attention of the US Senate. 

On May 7, 2015, Senator Lamar Alexander (R-TN), chairman of the US Senate Committee on Health, Education, Labor & Pensions, and Senator James Lankford (R-OK.), chairman of the US Senate Subcommittee on Regulatory Affairs & Federal Management, sent letters to various federal agencies, including the Department of Health and Human Services. The letters begin an investigation into whether the agencies’ use of “guidance” has resulted in such impermissible rulemaking. 

In the letter, the Senators note that under the Administrative Procedure Act (APA), in order to issue regulation, federal agencies must first issue notice of proposed rulemaking, then allow a public comment period, and then respond to the public’s comments. Agencies may also issue interpretive rules or guidance without going through this process, but those “non-legislative rules” do not have the force of law. The Senators expressed concern that, despite the non-obligatory nature of guidance, federal agencies are increasingly using guidance to create new requirements with the expectation of compliance, and are doing so in order to bypass the notice and comment process and to avoid public accountability.   

To health care providers, agencies expecting compliance with interpretive rules and guidance is not a new problem. For example, providers have long known that in order to maintain Medicare certification, they must comply both with the Conditions of Participation or Conditions of Coverage regulations and the Centers for Medicare and Medicaid Services (CMS) Interpretive Guidelines (IGs). Indeed, although CMS cites to the regulations when alleging non-compliance, its description of the alleged noncompliance often reflects expectations in the IGs, not the regulatory language. The result is that although the IGs do not technically have the force of law, as a practical matter, they might as well have it.

On several occasions, clients have asked me why they must adopt or change their policies or processes in order to “comply” with the IGs. In principle, they would like to push back – it is galling to many that they must change the manner in which they provide care to patients simply to comply with a nonbinding rule that has never been formally vetted. In some instances, the nonbinding IGs addressing the Emergency Medical Treatment and Labor Act do not take into account published court decisions interpreting the law – and yet, they are what CMS uses to determine compliance. 

My clients could fight the issue – but at what price?  The battle, they determine, is simply not worth it. The resources required to challenge CMS in an administrative proceeding and, eventually, court, is well-more than the cost of complying with the IGs.  Add to this the risk that the provider ultimately could be found noncompliant and lose its Medicare certification – and, well, it is simply not worth battling for the principle. As a result, providers continue to view IGs as if they are as mandatory as the regulations, and CMS continues to revise, expand, and, for all intents and purposes, enforce them.  

Will the Senate Committee’s proposed investigation change agencies’ expectations regarding obligatory compliance with guidance? It is too early to tell. In the meantime, I will continue to advise my clients to protect their interests by complying with the IGs.