New Stark Law and AKS Final Rules at Risk of Delay or Replacement Due to GAO Finding of Technical Deficiency and Biden Administration’s Regulatory Hold Memo

Nelson Mullins Riley & Scarborough LLP

On January 20, 2021, the Biden Administration issued a memorandum to all agencies announcing a regulatory freeze. The memorandum applies to a number of rules, including those rules that have been published in the Federal Register, or issued in any manner, but that have not taken effect, for the purpose of reviewing any questions of fact, law and policy the rules may raise. This freeze may affect the new Stark Law and Anti-Kickback Statute final rules that went into effect last week, which were found by a government report to violate the statutorily required waiting period for effectiveness. 

The Stark Law and Anti-Kickback Statute final rules were issued on November 20, 2020 (the “Issuance Date”) by the Centers for Medicare & Medicaid Services and the Department of Health and Human Services’ Office of Inspector General, respectively. The final rules were published in the Federal Register on December 2, 2020 (the “Publication Date”), with an effective date of January 19, 2021, with the exception of certain changes to the Stark Law’s “group practice” regulations, which have an effective date of January 1, 2022. 

The final rules must comply with specific legal requirements, including a prescribed delay in effective date, under the Congressional Review Act (the “CRA”). The CRA is an oversight tool that Congress may use to overturn rules issued by federal agencies, requires agencies to submit their rules to Congress before they can take effect. The CRA requires agencies to delay the effective date of a major rule 60 days from the date of publication in the Federal Register or receipt of the major rule by Congress, whichever comes later. After receipt, members of Congress have sixty (60) days to introduce a joint resolution disapproving a rule, which, if passed by both the House and Senate by simple majority votes, is submitted to the President for signature. Importantly, if Congress adjourns sine die (without establishing a day to appear again) within sixty (60) days of a rule being submitted, the CRA clock starts over in the new session of Congress. 

The U.S. Government Accountability Office (“GAO”) issued reports in mid-December finding that the final rules did not meet the 60-day delay required by the CRA since the final rules were not received by the House of Representatives and the Senate until after their Publication Date. 

It begs the question: will the Biden Administration freeze the final rules due to the GAO’s finding that they do not comply with the CRA? If so, will the Biden Administration re-issue the final rules with new effective dates or will it take the opportunity to revisit and revise the final rules?

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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