As we approach the end of 2024, it's clear that the federal healthcare administration is on the verge of significant transformation. The Republican party's victories in this month's Federal elections have set the stage for a change in focus and priorities. In the past, we've seen a shift from detailed regulatory processes under the Biden administration to a more deregulatory stance in a potential second Trump administration. This shift is not only expected in general but is also likely to be influenced by recent jurisprudence such as the June 2024 Supreme Court Loper Bright v. Raimondo decision.

Unraveling the Future of Federal Healthcare in 2025

HHS and HIPAA Security Rule Enforcement

During the end of October, a significant event took place. Mr. Oberfield, as a member of the Federal 405(d) task group, attended a two-day Federal conference on healthcare cybersecurity titled "Safeguarding Health Information: Building Assurance through HIPAA Security 2024". The conference materials are available here. Governmental presenters covered a wide range of topics, with a particular focus on the role of the Department of Health and Human Services in regulating healthcare providers' adherence to data safety standards. One of the hot topics was a proposed omnibus regulatory update to the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") security standards, along with the October engagement of the Federal Office of Management and Budget in the review process.Other important aspects discussed at the conference included medical device cybersecurity and several presentations from HHS divisions such as its Office for Civil Rights. Just after the conference, in November, OCR announced a number of enforcement actions concerning shortcomings observed in health providers' upstream risk analysis efforts. For example, fines were levied against Plastic Surgery Associates of South Dakota and Bryan County Ambulance Authority. This clearly shows that the Republican victories could have a significant impact on the rollout of various HHS priorities, including the completion of OMB's review and the enforcement prerogatives of OCR.

Skilled Nursing: An Arena Set for Change

The Security Rule is just one aspect of the federal healthcare portfolio that is likely to see a change come January 20th. In long term care, the outgoing Biden administration has been focusing on facility staffing as a means to ensure patient safety in skilled nursing facilities. The Centers for Medicare and Medicaid Services ("CMS") issued a final rule introducing "minimum staffing standards" to guarantee the "safety and quality" of services provided to residents of long term care facilities certified by Medicare and Medicaid. According to the rule, covered facilities are required to "meet or exceed a minimum of 3.48 hours per resident day for total nurse staffing including but not limited to—(i) A minimum of 0.55 hours per resident day for registered nurses; and (ii) A minimum of 2.45 hours per resident day for nurses' aides."The rule also emphasizes that these facilities must "ensure there are a sufficient number of staff with the appropriate competencies and skills set necessary to assure resident safety and to attain or maintain the highest practicable physical, mental and psychosocial well-being of each resident," which is determined based on facility assessments. However, GOP Attorneys General and various organizations have initiated a judicial action to invalidate this Minimum Staffing Rule under three main theories. They argue that CMS did not have the statutory authority to promulgate the rule, that it contradicts congressional intent, and that it is arbitrary and capricious.Regarding the first cause of action, plaintiffs claim that CMS violated the Administrative Procedures Act by promulgating the rule without Congressional authority. They specifically point to the requirement that long term care facilities have a registered nurse onsite 24 hours per day and the quantitative staff-to-patient ratio. For the second cause of action, plaintiffs assert that the rule rewrites the minimum staffing requirement established by Congress and goes beyond the scope of services performed by registered nurses. They also argue that the quantitative staff-to-patient requirement is unlawful as it contradicts the qualitative statutory requirement.In the third cause of action, plaintiffs contend that by promulgating the rule, CMS deviated from its past practices and ignored the fact that nearly all states had already made subjective determinations on staffing requirements based on their local conditions. They also claim that the rule is impossible for long term care facilities to comply with. Plaintiffs are seeking preliminary injunctive relief to maintain the staffing requirement status quo prior to the promulgation of the rule. Oral argument is scheduled for December 6, 2024. However, the results of this litigation may be overshadowed by the Trump administration's enforcement priorities in 2025, and many in the long term care industry believe that the staffing standards may be downsized during the second term of President Trump.

What's Next

Bond is closely monitoring the dynamics of agency enforcement in the wake of the forthcoming leadership change in Washington, not just in HHS but also in other areas. We will continue to provide updates on these developments to keep you informed.