On Feb. 28, the Department of Health & Human Services (HHS) announced that it was rescinding the Richardson Waiver. This policy, in place since 1971, said the HHS would provide notice of proposed rulemaking in certain cases where it was not otherwise required to do so by the Administrative Procedure Act (APA).
This announcement signals a policy shift for the agency and suggests that where permitted by law, the HHS will generally now issue rules relating to “agency management or personnel or to public property, loans, grants, benefits, or contracts” without providing notice and comment to stakeholders, and that it may otherwise find good cause to forego notice and comment procedures. The impact of this decision could be significant.
For example, the National Institutes of Health (NIH) may now be allowed to amend the financial terms of a grant sans public input.
NIH grant-making processes were suddenly thrust into spotlight early last month when the Trump Administration sought to impose a 15% cap on indirect cost rates for all new and existing NIH grants. A federal court recently put a preliminary injunction on the cap, which relied heavily on the underlying principle of the Richardson Waiver that federal agencies could not change federal policy unilaterally. In this case, the court said that the HHS Secretary could not change the indirect cost rates for NIH grants without first seeking public comment. This makes the timing of the decision to rescind the Richardson Waiver suspect.
A second potential area of concern involves the exception in the APA that allows agencies to dispense with notice and comment on rulemaking when there is “good cause” that a notice and comment period is impractical or contrary to the public interest.
The new HHS policy vaguely states that agencies may rely on the good-cause exception “in appropriate circumstances,” rather than “sparingly.” Federal agencies have used the good-cause exception legitimately during epidemics and natural disasters. However, courts have rejected exceptions claimed by agencies due to statutory deadlines, economic concerns or a need to seize upon political capital. It remains to be seen how much the Trump Administration will cite the good-cause exception to avoid public input on rulemaking.
Potential Effects on Medicare & Medicaid
Rescinding the Richardson Waiver may have limited impact on Medicare rulemaking. Per the Medicare statute, the HHS must engage in notice and comment rulemaking for any “substantive legal standard governing the scope of benefits, the payment for services, or the eligibility of individuals, entities, or organizations to furnish or receive services or benefits.” In other words, the HHS is statutorily required to seek public comment on all proposed rules involving Medicare.
