Kennedy Files Rule Ending Notice-and-Comment for Contracts, Grants

A new rule published in the Federal Register ends public comment on the Department of Health and Human Services’ (HHS) policies for benefits, contracts and grants within the agency. The rule could severely impair public transparency into policymaking at the agency.

HHS will instead comply with the Administrative Procedures Act of 1946 (APA) to the letter and only use the notice-and-comment process as expressed in the law. Modern Healthcare notes that HHS Secretary Robert F. Kennedy, Jr. explained in a policy statement published last Friday that the new rule will allow the agency to skip the procedure if it would be too encumbering or “contrary to public interest.” The announcement runs directly counter to the pledge that Kennedy made in his Senate confirmation hearings to “launch a new era of radical transparency.”

The ramifications of the new rule have yet to be fully determined, although experts suggest the implications could be far reaching.

Jeff Davis, healthcare director at McDermott+, told Inside Health Policy that the policy could reflect the agency’s response to a court intervention against modification of National Institutes of Health (NIH) indirect cost rate policy. Davis also noted Supreme Court cases like Azar v. Allina Health Services and other HHS regulations determine which policies require public comment periods, creating uncertainty about the scope of policies that could be impacted by RFK Jr.’s proposal.

According to the SCOTUS blog the question in Azar v. Allina Health Services in 2019 was whether HHS was permitted to change, without notice and comment, an important reimbursement formula for hospitals that treat many low-income patients. The SCOTUS majority agreed with existing Medicare regulations that requires notice and comment for any “rule, requirement, or other statement of policy” that “establishes or changes a substantive legal standard governing … the payment for services.”

The new rule could facilitate the Trump administration’s goals of heavily cutting the Medicaid program, with or without the participation of Congress. Former general counsel to the Office of Management and Budget, Samuel Bagenstos, told MedPage Today that Medicaid, the Substance Abuse and Mental Health Services Administration, the Administration for Children and Families, the National Institutes of Health and other agencies all fall under the new rule. However, he doubts that the rule will be interpreted as constitutional by the courts.

McKnight’s explains that this rule explicitly rescinds the “Richardson Waiver,” which was adopted in 1971 and removed notice-and-comment exceptions for “matters relating to agency management or personnel or to public property, loans, grants, benefits or contracts.” Kennedy argues that they “impose costs on the Department and the public” and are a hindrance to the Department’s “flexibility to adapt quickly to legal and policy mandates.”