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What are the Requirements for Issuing and Using Guidance Documents?

In the previous blog post, we covered the recent “Good Guidance Practices” introduced by HHS in August 2020.  The new “Good Guidance Practices,” in our opinion, do not bode well for the use of the False Claims Act against fraudsters.

In this post, we cover the requirements on how guidance documents are to be issued and used, including how individuals and entities may contest an HHS determination.

The Requirements for Issuance and Use of CMS, and other Agency, Guidance Documents 

First and foremost, it has been well articulated that guidance documents may not establish a legal obligation that does not already exist in a statute or regulation. Nor may they require a person or entity outside HHS to take or refrain from taking any action beyond what may be required by an applicable statute or regulation.

Interestingly, each guidance document, unless the law otherwise allows its contents to be binding, must include the following statement:

“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.”

Unfortunately, even though HHS seeks to clarify how guidance documents should be used, this disclaimer has created confusion.  Several of those who commented on HHS’s new rules during the public notice-and-comment period noted that the disclaimer could potentially confuse both regulated entities and members of the public.  Indeed, if a guidance document is not meant to bind the public, then how much clarity could it actually provide?  In its response, HHS disagreed, claiming that the disclaimer was “unlikely to be confusing.”

Other commenters were concerned about the language in the disclaimer stating that guidance documents “are not meant to bind the public in any way, unless specifically incorporated into the contract.”  An example explains the concern.  Many healthcare programs involve contracts with CMS, which often contain language that the contract will abide by all sub-regulatory guidance issued by CMS.

HHS responded to that concern by stating that if a contract states that the entity must comply with all federal laws and policies, then the entity must comply with sub-regulatory materials specifically referenced in the agreement, but not other sub-regulatory guidance.

All guidance documents will be posted in a repository at www.hhs.gov/guidance.  Any document not posted by January 6, 2021, has been rescinded.

Review and Reliance 

Any party may petition HHS to withdraw or modify a guidance document. Generally, HHS has 90 days to respond to a petition. 

The new regulations limit how HHS can use guidance documents as follows:

  • They may not be used to impose requirements on regulated entities unless otherwise expressly authorized by law or contract.
  • Noncompliance with a guidance document is not a violation of applicable statutes unless expressly authorized by law.
  • They are intended to explain the legal applicability of a law and merely articulate HHS’s understanding of how that law applies to a given set of circumstances.

HHS is still allowed to refer to a guidance document in a civil enforcement action, but only if it is published in the guidance repository.

The Opportunity to Contest

 Perhaps the most impactful change to HHS’s operation is a regulated entity’s new opportunity to contest an HHS determination.  The new regulations put the following procedure into place:

  1. When HHS takes a civil enforcement action against an entity, which has legal consequences, the Department shall provide written notice to the entity of the “initial legal and factual determinations underpinning the initial adverse determination.”
  2. The entity has a “meaningful amount of time” to respond in writing to the Department, and an oral response may be allowed by HHS.
  3. Then the Department must provide its written response to the entity’s arguments. This includes an articulation of the basis for the Department’s final determination.

There are two exceptions:  HHS does not need to provide written notice of legal and factual conclusions (i) if the Department believes that there is a serious threat to health or safety, or (ii) if a statute allows it to proceed without a prior opportunity to be heard.  HHS still allows an entity’s response.  However, the process may be delayed until it becomes feasible.

Conclusion

 As stated by HHS, the new regulations are intended to improve the fairness of the Department’s guidance and guard against the use of guidance documents as additional regulations subject to civil enforcement actions.  In particular, the new process giving regulated entities an opportunity to be heard and requiring a detailed Department response seems to further these goals. With that said, it should not affect Medicare Fraud qui tam lawsuits based on true fraud – clearly outside of any practical opportunity to contest administrative actions.

At Nolan Auerbach & White we’re always on the lookout for new regulations that impact Healthcare Fraud. If you have any questions about these Good Guidance Practices or any other Healthcare Fraud subject, please contact us online, or at (800) 372-8304.

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