The Biden administration last week delayed a controversial Trump-era rule requiring HHS to assess nearly all its regulations after 10 years and end them automatically if the department doesn't review them within five years.
HHS paused the rule, which was supposed to take effect on Monday, because of a lawsuit filed on Mar. 9 by several organizations. The American Lung Association, the National Association of Pediatric Nurses and others claimed the rule was a "ticking timebomb" that could severely disrupt the healthcare system by creating regulatory confusion—more than 17,000 rules could sunset by 2026, according to the lawsuit.
Federal regulators said the claims are "credible" and that they won't move forward with the so-called "SUNSET" rule until the case makes its way through the courts.
"HHS is unaware of any benefits from the implementation of the SUNSET final rule that would be significantly curtailed from a stay of its effective date. The department is taking a fresh and critical look at the SUNSET final rule in light of the allegations in the complaint (although many of these concerns were also raised during the comment period on the proposed rule)," the rule said.
The rule subjects most regulations to a two-step review. HHS would first decide whether a rule has a significant economic impact on a large number of small entities. If it does, the department will review whether the rule is still needed; complaints about it; its complexity; if it duplicates or conflicts with other regulations; and whether the agency should rework or withdraw it because of technological, economic or legal changes.
But some healthcare groups have called the process duplicative and burdensome, noting that the Administrative Procedures Act already requires review and comments on proposed regulations. In particular, the Medicaid and CHIP Payment and Access Commission said the Trump-era plan would create confusion for managed care plans, states, providers and beneficiaries and force inexperienced staff to assess rules that may be essential to some HHS programs without understanding their impact.
"The new requirements will create additional unnecessary work that will distract the department and CMS from the critical roles they play in our healthcare system, Medicaid and CHIP amid the pandemic and its resulting economic challenges," MACPAC wrote in its comment on the proposed rule.
The Biden administration could eventually withdraw the rule, even if it survives legal challenges.