The Health & Human Services’ (HHS) recent announcement to end more than 50 years of public involvement in rulemaking raises concerns, as the full scope of its impact on nursing homes is not yet apparent. The change could also limit the agency’s authority in issuing rules, such as the previous administration’s minimum staffing mandate.

That said, sector experts remain confident HHS Secretary Robert F. Kennedy Jr.’s policy move will keep existing processes for rulemaking largely intact.

HHS’ new policy generally doesn’t seem to be exempting items like the annual rate notices, according to Brian Ellsworth, vice president for public policy and payment transformation at Health Dimensions Group.

“I can’t imagine a controversial rule with a large potential impact being put out there with no notice and comment and that not being immediately challenged on procedural grounds,” said Ellsworth.

The Administrative Procedure Act (APA) – a federal law that regulates how federal agencies create and issue rules and regulations as well as how courts review agency actions – would still apply in these instances, he said. Moreover, there is a lot of precedent and case law about when APA should and shouldn’t be applied.

“The proof will ultimately be in the pudding, right? As someone who has operated in [the skilled nursing] realm for a long time, [APA is] a pretty well worn statute and practice that would take a lot to overturn,” Ellsworth said.

In fact, APA has been around for so long that industry leaders simply won’t escape following existing practices for rate notices and other rules. Advanced notice and a comment period for the Skilled Nursing Facility Prospective Payment System (SNF PPS), for instance, has been baked into the process for at least 50 years, Ellsworth said, with the proposed rule introduced in the spring and finalized in July.

“None of that’s going to change,” said Ellsworth.

In updating the rulemaking process, the Kennedy policy does two things: first, it introduces exemptions to the APA on matters relating to agency management or personnel, or to public property, loans, grants, benefits or contracts, said Ellsworth.

The APA largely protects the comment period, and the new policy carves out specific instances where the agency can forgo this part of the process.

Second, it removes the previous dictate to use the “good cause” exemption sparingly when the agency finds the procedures are “impracticable, unnecessary, or contrary to the public interest.” This part of the policy could muddy the waters when it comes to use of the APA as it pertains to CMS issuing rules such as the staffing mandate.

All said, leaders see the policy notice relating mostly to internal management of the agency. Policy makers won’t be able to forgo publishing rules for comment when it comes to how external parties, such as nursing home providers, work with the agency.

At the same time, the policy does have language that raises questions about implementation, for some nursing home advocates.

“The agency can forgo public participation for ‘good cause’ when the agency finds that the procedures are’“impracticable, unnecessary, or contrary to the public interest,’” said Linda Couch, senior vice president of policy for LeadingAge. However, she added, “We don’t know the scope of what this will impact; our hope is that nothing we regularly discuss regarding the impacts on older adults and the providers who serve them will be affected.”

Holly Harmon, senior vice president of quality and regulatory affairs for the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) said that the association is committed to continuing its role in ensuring providers’ voices are heard, whether through the rulemaking and comment process, or through other channels.

“We can offer meaningful insights to how the decisions in Washington will impact patients and providers in communities across the country,” said Harmon. “It remains our goal to foster a collaborative working relationship and open dialogue with agencies like HHS and CMS to develop rational regulations that support seniors, caregivers, and the larger health care system. We will remain engaged and forthcoming around the decisions that directly impact long term care.”

While the impact of the policy has yet to be seen, operators including the Diakonos Group rallied behind public comment in rulemaking overall, arguing that these comment periods give operational “reality checks” to legislators.

“The nursing home sector is so heavily regulated and reliant on public comment periods to provide operational insights to regulators,” said Kimberly Green, COO for Diakonos. “Often times that is how we make our voices heard when we don’t feel we can make an impact in other ways.”

Such comments can give more accurate cost estimates than initial agency projections, she said, which can lead to more realistic implementation timelines while showing how a rule might disproportionately affect rural operators.

Rules without Congressional authority: Biden’s staffing mandate

The staffing rule, however, is a different animal. Or at least, future regulations like it. It started as a proposal from the Biden administration and not a byproduct of a specific Congressional directive, which may determine whether APA applies or not to such future rules, and therefore making it easier to be rejected by the courts, Ellsworth said.

Moreover, the now overturned Chevron doctrine previously gave HHS and other federal agencies deference in interpreting how statutes applied to rules such as the staffing mandate. And since the Chevron doctrine’s dismantling, that interpretation is now up to the courts, Ellsworth said.

“The fisheries case talks a whole bunch about the Administrative Procedure Act … it’s one of the reasons why we don’t need agencies interpreting the statutes that are required by the APA to issue rules and get public comment on them,” Ellsworth said of the case that overturned Chevron Doctrine last June. “The staffing rule is a little bit of a different animal, in that there’s a fundamental question on it as to, is there sufficient statutory basis to issue that rule in the first place.”

Policy as streamlining effort

The idea of pushing rules without public transparency goes against the direction Kennedy wants to move the agency, Ellsworth added. After all, Kennedy has talked a lot about transparency, and creating a situation where a controversial rule isn’t subjected to public comment doesn’t scream transparency.

If anything, the new policy aligns with the administration’s efforts to streamline processes, and is more about trimming back extra requirements the agency imposed on itself, Ellsworth noted.

“That said, an area of concern might be exempting grants from public comment,” said Ellsworth. “There are times when grant design and availability should be widely disseminated so that the public can weigh in. As a general rule, the more input, the better the final product.”

Regarding good faith exemptions, the policy directive states that the APA rules would still apply, he said. If HHS starts abusing that exemption, Ellsworth expects there to be court challenges and entreaties to Congress.

“This could be the tip of the iceberg, it can go in a lot of directions, but this administration has said they want to streamline things, and they want to eliminate unnecessary regulations,” said Ellsworth. “There could be pluses and minuses to all of this, but … I don’t see that as somehow sanctioning that we’re going to go down some path where we’re going to be issuing lots of regulations and we’re not going to care what the public thinks about them. In fact, I see the overall tone of this administration going in the opposite direction.”