HHS delays effective date of controversial sunset rule to 2022 in response to lawsuit

Gavel and flag in courtroom
A major lawsuit calling for the end of a controversial sunset rule prompted the Department of Health and Human Services to delay the effective date of the regulation until March 2022. (Getty/AlexStar)

The Department of Health and Human Services (HHS) has delayed the effective date of a controversial rule that calls for the agency to review more than 17,000 regulations until 2022.

The agency announced in a regulatory filing late Thursday that the reason for the delay is a lawsuit filed by several health groups seeking to get rid of it.

HHS said the allegations that the rule will be harmful are “credible.”

“A postponement will permit HHS to review the sunset final rule in light of the claims raised in the litigation, and the balance of equities and public interest warrant postponement of the effective date to preserve the status quo while the court considers the challenge to the sunset final rule,” the regulatory filing said.

The rule, which went into effect on Jan. 19 ahead of President Joe Biden's inauguration, calls for a massive review of all HHS regulations. Under the rule, any regulation will be sunset and expire 10 years after its release date unless the agency performs a review to determine whether it should be amended or rescinded.

The regulation also gives HHS five years to review every regulation more than 10 years old, a daunting task for an agency with more than 17,000 rules. Any rule that isn’t reviewed after this five-year period will expire.

A lawsuit filed by several health groups earlier this month argues that the rule was a “ticking timebomb” set to go off unless HHS devotes enormous resources for the task.

The lawsuit also charges the rule, first proposed on Nov. 4, was rushed and didn’t give the public enough time to comment.

HHS said that the status quo should stay in effect while the lawsuit makes its way through the courts.

“If the rule took effect while HHS was evaluating the rule in light of the claims raised in litigation, it could create significant obligations for HHS, cause confusion for the public, including plaintiffs, and may lead to compliance costs as entities … plan steps necessary to deal with the rule’s implementation,” the agency said.

HHS added it did not think of any benefits from the implementation of the rule are “significantly curtailed” from the delay.

The agency also had serious concerns with the rule itself. For example, HHS said the short period of time to review regulations means some regulations would expire without any additional administrative process.

“The potential automatic expiration of regulatory programs could create uncertainty and unpredictability regarding large swaths of the rules governing healthcare, which would upend the status quo and in turn could result in compliance costs to HHS grantees, contractors and healthcare providers and suppliers,” the agency added.

This is the latest regulatory delay undertaken by the HHS. The Biden White House issued a memo after the inauguration calling for a regulatory freeze of any rules published at the last minute by the Trump administration.

Other rules affected by the freeze include a rule intended to hasten Medicare coverage approvals for new medical devices and a rule to remove the safe harbor for Part D rebates.