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Federal Regulations Advisor Insight and Commentary on U.S. Government Regulatory Affairs

Monday Morning Regulatory Review – 11/19/12

Posted in Judicial Review & Remedies, Regulatory Flexibility & Small Business, Regulatory Process

Activity at the Office of Management and Budget (OMB) has begun to pick up after the election – the Patient Protection and Affordable Care Act (ACA) regulations lead the way.  On the other hand, another court ordered an exemption from the mandatory contraceptive coverage regulation ahead of Department of Health and Human Services (HHS) submitting a proposed rule to OMB.

Security regulations also received attention with OMB completing review of Department of Commerce and Department of State regulations, while the Department of Homeland Security forwarded additional identification regulations for review.  This week’s “outlier” appears to be the Commodity Future Trading Commission (CFTC)’s publication of proposed amendments to a unique class of commission futures merchants.

Health & Medicare:  HHS published its CY2013 Medicare ambulatory surgical center (ASC) payment system final rule to implement “applicable statutory requirements and changes arising from [their] continuing experience with these systems.”  The final rule requests comments and excludes the addenda tables from the Federal Register publication.  HHS did this last year “to decrease administrative burden and reduce costs associated with publishing lengthy tables. Instead, these Addenda will be published and available only on the CMS Web site.”  This novel approach does not appear yet to have been tested in court under the Administrative Procedure Act (APA).

HHS submitted three Medicare payment amount notices for OMB review:

  • Inpatient Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts for CY 2013;
  • Part A Premiums for CY 2013 for the Uninsured Aged and for Certain Disabled Individuals Who Have Exhausted Other Entitlement; and
  • Part B Monthly Actuarial Rates, Monthly Premium Rates, and Annual Deductible Beginning January 1, 2013.

All three notices are time sensitive.  Be aware, however, that a number of HHS Centers for Medicare and Medicaid Services (CMMS) rules are constantly being litigated and, as noted last week, the Disproportionate Share formula has been vacated and remanded.

Evident difficulty with HHS managing and accounting for an increasing segment of the health care industry raises questions of the government’s ability to manage the whole industry.  Continuing development of ACA regulations exacerbates these management and accounting issues.  Health care providers should be wary.

Contraceptive Exemption Injunction:  The United States District Court for the District of Columbia granted a preliminary injunction against the application of the contraceptives mandate in HHS regulations in Tyndale House Publishers, Inc. v. Sebelius on November 16, 2012.  The court found sufficient standing for Tyndale, a for-profit self-insured religious publisher owned by non-profit religious foundations, to pursue a Religious Freedom Restoration Act-as-it-implements-the-First-Amendment claim.  This injunction bars application of the contraceptive mandate regulations to Tyndale and the health insurance it provides its 260 employees.  Tyndale is at least the third “application injunction,” further expressing the primacy of religious freedom over universal and uniform health insurance.

As yet, HHS has not sent to OMB a proposed rule to implement a religious exemption to the ACA contraceptive mandate regulations and the problem increasingly becomes one of how or whether HHS can make regulatory sense of the variety of corporate structures and legal arguments in numerous judicial decisions.  While direct judicial review of the rule remains far off, litigants have found the means to exempt themselves, one at a time.  If the pattern holds, many more application injunctions lie ahead.

International Arms:  OMB completed review on several proposed international arms rules and industry will have an opportunity to chime in:

  • Revisions to the Export Administration Regulations: Control of Military Electronic Equipment and Related Items the President Determines No Longer Warrant Control Under the United States Munitions List;
  • Revisions to the Export Administration Regulations (EAR) to Make the Commerce Control List (CCL) Clearer; and
  • Amendment to the International Traffic in Arms Regulations: Revision of U.S. Munitions List Category XI.

A significant number of proposed and final rules amending the International Traffic in Arms Regulations remain pending at OMB.  This is one area in which DOS can exercise

Personnel Identification Security:  DHS submitted the Coast Guard Transportation Worker Identification Credential (TWIC); Card Reader Requirements proposed rule for review on November 16.  This proposed rule will set electronic identification card reader requirements for maritime facilities and vessels in combination with the Transportation Security Administration (TSA)’s TWIC.  The industry is vast, but DHS continues to suggest that the proposed rule will be economically not significant, and it is very overdue.

Futures Commission Merchants:  The Commodities Futures Trading Commission (CFTC) proposed amendments to existing regulations and to add new regulations to require enhanced customer protections, risk management programs, internal monitoring and controls, capital and liquidity standards, customer disclosures, and auditing and examination programs for futures commission merchants.  The proposal also addresses certain related issues concerning derivatives clearing organizations and chief compliance officers.  In short, CFTC proposed additional regulations on how merchants can use customer funds, and other restrictions.  The CFTC has previously defined small entities under the Regulatory Flexibility Act (RFA) and the RFA does not apply because of the minimum financial requirements the CFTC established to enhance the protection of customers’ segregated funds and protect the financial condition of futures commission merchants.