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The Role of Agencies in Making and Enforcing Healthcare Law




The word agency or bureaucracy doesn't appear anywhere in the original Constitution of the United States. Yet agencies are so important in so many areas of our life at both the federal and state level, the day-to-day regulation that health care providers face is often and even predominantly directed by specialized agencies as opposed to Acts of Congress. So we need to understand agencies, where they come from, how they operate in order to take specific topics in health law and think about the way that specialized federal agencies regulate health care providers.


Congress will pass a statute that creates the agency and often gives it a fairly vague mandate to regulate, to provide insurance, to ensure drug safety. But the real details of the regulatory regime, the actual specification of what hospitals and companies and providers are supposed to do are usually filled in by these expert agencies and they act in several different ways. They can write really specific rules, they can adjudicate individual cases, they can approve or disapprove specific new therapies, and all of this takes place within a regime that requires certain due process. Values agencies have to follow. It requires them to be transparent to a degree, explaining to the public and to the regulated individuals and industries what they're doing, and also taking input from those relevant stakeholders all in formulating better regulatory policy.


So when agencies work well and are responsive to changing conditions and to

the stakeholders whom they're regulating and regulating for, we can really optimize I think health care law and policy. When agencies work poorly and are not transparent and perhaps drift further away from their original mission, we see some of the downsides of over-regulation by agencies or insufficiently responsive regulation.


Agencies often have jurisdiction over fairly specialized part of our economy or our society. But within that specialization, they often have powers that transcend and borrow from all three branches of government; the Legislature, the Executive, and the Congress. So for instance, most powerful agencies, health and human services, a good example in the healthcare context have the power to write rules of general applicability binding everybody in the industry that look a lot like statutes that often take years to write and promulgate, but then are very important for how we structure the provision of medical care in this country.


A good example is the way that Congress passed a fairly vague privacy rule in HIPAA, the Health Insurance Privacy and Portability Act, but then, Health and Human Services over years took time to write a very detailed set of regulations known as the HIPAA Privacy Rule which governs the day-to-day operations of most health care providers in this country when it comes to privacy practices.


Sometimes agencies act much more like courts, taking a specific question that needs a ruling and adjudicating matter or issuing an approval decision. In the context of new therapies like new pharmaceuticals, of course, the major agency is the Food and Drug Administration, or the FDA. When it acts in this kind of quasi adjudicatory manner, it takes all the information available via a new drug application, applies a very vague statutory standard, the requirement that new therapies be safe and effective, and issues a ruling yes or no on whether that new drug can be marketed.


Likewise, agencies sometimes have individuals who act very much like judges issuing rulings of law on various benefits questions involving medicare benefits or social security benefits, and in these cases, act and look very much like courts of law although technically in the agency regime and always subject to judicial review from the ordinary federal courts when they operate that way.


Finally, anyways that are vivid to many of you who work at healthcare institutions,

agencies operate with the full toolkit of executive power to investigate, to haul witnesses, to sometimes make arrests in the case of some agencies, to gather documents, and we see lots of instances where hospitals, insurance companies, sometimes individual providers are subject to investigation by the Executive Branch, discretion that these agencies permit. On this theme of discretion, it's important to emphasize that in all of the ways that agencies act, whether they're writing rules, whether they're issuing approval decisions, or whether they're investigating or enforcing the regulations on health care providers, there's a wide degree of rule-making discretion, policy discretion, enforcement discretion that comes with the stature of administrative agencies.


The statutes that Congress writes are often vague, they're often unspecified leaving a lot of room for the agencies to fill in the day-to-day application of the law. That means that the law can often change faster from one administration to the next through administrative lawmaking than it can through statutory lawmaking in Congress or through judicial lawmaking one case at a time.


In the healthcare field, there's a proliferation of agencies. Some of the key ones include the cabinet-level agency, Health and Human Services, a number of sub-agencies within HHS, like CDC, FDA, like CMS, like NIH, each of which has a fairly specific jurisdiction but lots of power within its area of jurisdiction.


Pros:


Agencies are often populated by scientists, physicians, economists, career civil servants who are real experts can often take a specific area of healthcare regulation and calibrate the regulation much better to the clinical realities and the financing realities than any legislature ever could. So when an agency is working well, it really brings expertise and technocratic strength to bear on the issue.


Agencies can be specialized with a particular area, or instance, the FDA with drug safety, and overtime develop a real institutional reputation, and even degree of accountability in that area in a way that perhaps elected officials who cycle through would not.


Cons:


On the flip side, the folks who work at administrative agencies by in large are not elected. They're not as subject to political input as elected officials often are, and so sometimes that leads to the charge that agencies are indifferent to public values, can be indifferent to the needs of the regulated industry or the providers working in the industry, an over-regulate, and these are very real concerns.


Also, a highly specific regulatory regime like the HIPAA Privacy Rule runs the risk of stifling private innovation because it tells covered entities under HIPAA exactly what they need to do to protect privacy when perhaps under a somewhat vaguer or less intrusive regulatory standard, private providers would innovate and come up with a more efficient more protective regime for keeping information confidential.


There's no single answer for how much regulation is too much, but I think what we do know is that agencies are crucially important within the federal and state structures for their ability to bring a degree of scientific and medical and technocratic expertise and to be more responsive to changes in clinical outcomes and economic conditions than are federal statutes or a federal case law would be.


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