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HHS Proposes New Practices for Issuance of Guidance Documents

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In a move with far reaching implications for the health care industry, the Department of Health and Human Services (HHS) recently released a proposed rule that would codify into regulation specific requirements that it and its related agencies must follow when issuing guidance to the public or regulated entities.

View the Proposed Rule Here

Comments on the Proposed Rule are due no later than September 16, 2020.

The new regulations would apply to all divisions of HHS other than the Food and Drug Administration, which includes the Centers for Medicare & Medicaid Services (CMS) – an agency that is prolific in its issuance of both formal rulemaking and other guidances in the form of call letters, memos, interpretive guidelines, releases to pharmaceutical manufacturers and providers, and the like.

The Proposed Rule makes a distinction between “Guidance Documents” and “Significant Guidance Documents.” Guidance Documents would be considered “any Department statement of general applicability which is intended to have future effect on the behavior of regulated parties and which sets forth a policy on a statutory, regulatory, or technical or scientific issue, or an interpretation of a statute or regulation.” HHS clarifies that Guidance Documents can be issued in a variety of formats, such as “letters, memoranda, circulars, bulletins, advisories, and preambles” and would not encompass technical or scientific information unless also accompanied by a policy that would impact the behavior of regulated entities. Importantly, the Proposed Rule clarifies that Guidance Documents do not include rules or regulations promulgated pursuant to notice and comment rulemaking.

Any Guidance Document issued by HHS or one of its agencies will be required to contain the following language: “The contents of this document do not have the force and effect of law and are not meant to bind the public in any way, unless specifically incorporated into a contract. This document is intended only to provide clarity to the public regarding existing requirements under the law.” The Proposed Rule also calls out several technical requirements that any Guidance Document issued by HHS must contain.

Significant Guidance Documents, on the other hand, would be defined to have a more specific scope and focus:

[A] Guidance Document that is likely to lead to an annual effect on the economy of $100 million or more, or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities; create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights or obligations of recipients thereof; or raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles of Executive Order 12866, ‘Regulatory Planning and Review.’

HHS retains the ability to determine whether a Guidance Document qualifies as a Significant Guidance Document, and will operate under the “presumption that a guidance document that HHS deems significant is actually a legislative rule that must go through notice-and-comment rulemaking.”

The Proposed Rule also requires HHS to create a “guidance repository” on its website within 60 days of finalization of the Rule. Importantly, if HHS does not include a previously released Guidance Document in the repository by November 2, 2020 (of note, the day prior to the upcoming Presidential election), the Guidance Document “shall be considered rescinded.” While the public and industry do not have a mechanism to provide input as to what Guidance Documents are included in the repository, the Proposed Rule does include a petition procedure whereby “any interested party may petition [HHS] to withdraw or modify any particular guidance document” in effect at the time that the party files their petition.

It should be noted that the Department of Justice (DOJ) under the Brand Memo in 2018 declared that DOJ “may not use noncompliance with guidance documents as a basis for proving violations of applicable law in [False Claims Act (FCA)] cases.” But it is not clear how DOJ would apply this policy to FCA cases involving contracts that require compliance with Guidance Documents. In recent years, CMS has mandated compliance with guidance documents in contracts with contractors and vendors, such as pharmaceutical manufacturers who participate in the Medicaid Drug Rebate Program. The Proposed Rule specifically states that this practice will be continued related to both Guidance and Significant Guidance Documents.

All companies and entities that are regulated by HHS should carefully review the Proposed Rule and submit comments as soon as possible. Additionally, once the guidance repository goes live, entities should review it carefully to determine which current documents remain in effect.


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