STREAMLINING REGULATIONS DEVELOPMENT 
IN THE 
DEPARTMENT OF HEAL TH AND HUMAN SERVICES 
OFFICE OF INSPECTOR GENERAL 
OFFICE OF ANAL YSIS AND INSPECTIONS 
June 1988
 Office of Inspector General

The mission of the Office of Inspector General (OIG) is to

promote the efficiency, effectiveness and integrity of

programs in the United states Department of Health and Human

Services 
(HHS). It does this by developing methods to detect 
abuse. 
and prevent fraud, waste and  Created by statute in
1976 , the Inspector General keeps both the secretary and the 
Congress fully and currently informed about programs or

management problems and recommends corrective action. The 
OIG performs its mission by conducting audits, investigations

and inspections with approximately 1, 200 staff strategically

located around the country.

ections 
Office of Anal vsis and Ins 
This report is produced by the Office of Analysis and

Inspections 
(OAI), one of the three major offices within the
OIG. 
The other two are the Office of Audit and the Office of 
Investigations. The OAI conducts inspections which are

typically short-term studies designed to determine program

effectiveness, efficiency and vulnerability to fraud or

abuse. 
This ReDort

Enti tIed "Streamlining Regulations Development in the

Department of Health and Human Services, " this report was

conducted to examine rulemaking in HHS and describe best

practices to help streamline the process.

The report was prepared under the direction of Al fred E.

Shpiegelman, Regional InsIpIeIct.o r General, Office of Analysis

and Inspections, Region  Participating in this proj ect 
were the following people:

Joy Quill, National proj 
ect Director, Region III 
Nancy J. Molyneaux, Program Analyst, Region III

Faith McCormick, Program Analyst, Headquarters
 STRNING RETIONS 
DEVLOPM 
IN TH 
II 
DEPAR 
OF HETH AN 
SERVICES 
RICH 
JU 
P.G KUESSHERO W 
INSPECTR  1988
OM -03-88-00180
 COHTS

TABLE OF 
PAGE 
EXCUIV SUMY 
INDUCTION 
FINDINGS 
RECOATIONS 
APPEICES  EXECUIV SUMY

Puroose 
The purposes of this inspection were to examine the 
regulations development process in the Department of Health

and Human Services (HHS), identify factors found to cause

delays and describe best practices to help streamline the

process. 
Backaround 
Federal agencies develop regulations to 
implement provisions of newly-
enacted legislation and to

establish or change program policies within existing

legislative authority. 
The development of Federal
regulations is governed by Federal laws and Executive Orders

designed to allow public participation in the rulemaking

process and control Federal paperwork burdens imposed on the

publ ic . 
The HHS generally publishes two types of regulations in the

Federal Reaister

Notices of ProDosed Rulemaking 
(NPRMs) let the public

know that a regulatory change is being considered and

allows time for public comment.

Final Rules are prepared after consideration of public

comments. Once published 
, final rules have
the force of law.  in the 
There are three key players in the HHS rulemaking process.

Operating Divisions (OPDIVs) develop program policies

and write most rules. 
Staff Divisions 
(STAFFDIVs) in

the Office of the Secretary 
(OS) also write some rules.

The OS Executive Secretariat 
(ES) manages the review and

clearance of proposed and final rules within OS

STAFFDIVs and with other HHS program components.

The Executive Office of Management and Budget 
(EOMB)
reviews all rules before publication.

The development of regulations is a complex process which

seldom runs smoothly. 
Every step can be time consuming.

The process is meant to insure that all comments and any

nonconcurrences will be resolved before 
 publication. In

addition, external events such as new legislation or court

decisions can cause a draft rule to be withdrawn or revised

and the entire process to be started again.

Some laws contain implementation deadlines. 
Rules written

pursuant to these laws must be published by the statutory

deadlines. For laws without deadlines, and for regulations

initiated within existing legislative authority, OPDIVs

establish the dates by which NPRMs and final rules will be

published.  Ttis inspection was conducted in response to concerns that

some regulations may have taken an unreasonably long time to

develop and publish. It consisted primarily of interviews

with regulations staffs in the Health Care Financing

Administration, the Social Security Administration and the

Family Support Administration. Discussions were also held

policy coordinators, selected OS STAFFDIV

wi th  OSIES 
representatives and the EOMB. We also reviewed the systems

to track regulations.

used by OPDIVs and  OSIES 
Findings 
o The rulemaking process is designed to insure that relevant

legal, policy and program issues will be addressed and that

final rules will be well-reasoned documents which can

the process is 
withstand public scrutiny. Although 
complicated and many players are involved, all major steps

and decision points are necessary and reasonable.

o While all OPDIVs reviewed follow the same basic steps in

developing regulations, each has adapted the process to

requirements. 
meet its own program and organizational 
o Despite tight timeframes and often complicated issues, the

OPDIVs reviewed meet virtually all budget deadlines for

publication. 
Target dates for other high priority 
regulations are sometimes missed, however.

o Program priority changes and the complexity of issues

covered were identified as the most common reasons for

extending the time required to publish a regulation.

waiting outcomes of pending legislation or court

decisions, impact on mUltiple programs and a high volume

I ic 
of pub  comment were also cited as adding time to the 
process. 
o Moreover, external pressures from advocacy groups and 
industry organizations, as well as media coverage prior to

pUDi  cation of proposed and final rules, have had
profound impact on rulemaking. 
has established an automated tracking system

o The  OSIES 
designed to monitor the rulemaking process and insure that

established schedules are followed.  Recommendations 
The OS/ES should: 
develop a systematic process to identify and begin

tracking high priority regulations as soon as new

legislation is passed; and

establish a mechanism to systematically seek early

invol vement of 
affected components, both OPDIVs and 
STAFFDIVs, in issue identification and development of

regulations. 
high priority 
The OPDIVs should:

hold their top managers accountable for timely

regulations development by incorporating elements on

timeliness in their merit pay plans; and

take steps to reduce internal issue resolution and draft

review times. 
iii
 INTODUCTION

Federal agencies develop regulations to implement provisions

of newly-enacted legislation and to establish or change

authority. 
program policies within existing legislative 
The development of Federal regulations is governed by Federal

laws and Executive Orders designed to allow public

participation in the rulemaking process and control Federal

paperwork burdens imposed on the public. A description of
applicable laws and executive orders appears at Appendix A.

The Department of Health and Human Services (HHS)  issues 
three types of regulations:

Notice of ProDosed Rulemakina (NPRM) -- announces to the

public that regulatory change is being considered.

Pulished in 
Federal Register 
), the NPRM 
the 
describes the proposed changes and allows time for

publ ic comment. 
Final Rule -- developed after consideration of public

comments. Once  , a final rule has

published in the 
the force of law. 
Interim Final Rule/Final Rule with Commentr u-l-e u.s ed in

rare instances to go directly to a final  This 
technique is most often used when a new law requires

regulatory action wi 
thin a short time or where the 
agency has little or no policy discretion in developing

the rule. If significant comments are received in

response to the Interim Final Rule, the agency generally

publishes a final rule that addresses the issues raised. 
Regulations are written and cleared by the OPDIV and reviewed

by OS STAFFDIVs and affected OPDIVs in a process managed by

After the initiating OPDIV makes revisions in

the  OS/ES. 
response to these reviews  reclears the rule, obtains

OS/ES
Secretarial approval and submits the package to 
EOMB. 
After 
Following EOMB review, NPRMs are published in the 

a public comment period, the OPDIV considers all comments and

develops a final rule, making any revisions necessitated by

those comments. The final rule must be reviewed again by

OS/ES and EOMB before being published as a final rule. 
The development of regulations is a complex process which

seldom runs smoothly. Every step can be time consuming.

Comments and nonconcurrences should be resolved before 

publ ication. In addition, external events such as new 
legislation or court decisions can cause a draft regulation

to be withdrawn or revised and the entire process to be

started again.
 Some pieces of legislation contain implementation deadlines.

Rules promulgated pursuant to these laws should be published

and take effect by the statutory deadlines. 
For laws with no 
and for regulations initiated wi 
deadl ines,  thin existing 
legislative authority, OPDIVs establish dates by which

proposed and final rules will be published. Projected dates

are published in two documents:

Reaulatorv Proaram of the united States Government

-- published annually by EOMB, it contains all

planned regulations considered significant by all

Federal agencies for a I-year period, April 1

through March 31. 
HHS semiannual Reaulatorv Aaenda -- published in

in April and October of each year, it

the 
contains all regulations under development in HHS. 
These documents are prepared at different times of the year.

Due to changes in program priori 
ties, unforeseen problems or 
other factors, projected publication dates for a particular

rule may differ from one document to another. In the past,

some regulations have taken far longer to publish than

originally estimated.

This inspection was conducted in response to concerns that

some regulations may have taken an unreasonably long time to

develop and publish. Its purposes were to examine the

regulations development process within HHS, identify factors

found to cause delays and describe best practices to help

process. 
streaml ine the 
inspection: 
We selected three OPDIVs for inclusion in the 
the Health Care Financing Administration (HCFA), the Social

Security Administration 
(SSA) and the Family Support
Administration 
(FSA). These OPDIVs vary significantly in the 
type and volume of regulations for which they are

responsible. The inspection consisted primarily of

discussions wi tq  policy
OPDIV regulations 
staffs,  OS/ES 
coordinators, selected STAFFDIV representatives and the EOMB. 
We also reviewed the systems used by OPDIVs and  OSIES 
track regulations through the development process.
 FINDINGS 
HOW AR REGUTIONS DEVLOPED? 
AL OPDIVs FOLLW TH SAM BAIC STEPS. 
All HHS regulations are developed following the same basic

steps. 
This chart highlights what are generally the major 
steps in the HHS rulemaking process.

REGULATIONS DEVLOPMENT PROCESS 
ACTION STEP  RESPONSIBLE 
COMPONENT 
Decision on need for rulemaking  OPDIV 
Develop specifications, draft rule  OPDIV 
Internal OPDIV and their GC clearances  OPDIV 
OS/ES  OPDIV 
OPDIV head approval, submit to 

STAFFDIV /OPDIV clearances, comments  OSIES 
conveyed to OPDIV

OSIES  OPDIV 
Revise draft rule, resubmit to 

for reclearance

Secretarial approval, submit to EOMB  OSIES 
EOMB review 
EOMB 
Revised draft rule  OPDIV 
10. STAFFDIV/OPDIV clearance, submit OS/ES 
revision to EOMB

11. EOMB final review
EOMB 
12. Refer to Office of the Federal Register OS/ES 
(OFR) for publication

publication 
13.  (3 days after receipt)  OFR 
14. Pulic 
comment period (usually 60 days) 
15. Consider all comments, revise rule OPDIV 
16. Repeat steps 3-13 for final rulemaking EACH OPDIV HA ADAPD TH PROSS TO ITS OWN REQUIRES. 
We reviewed the regulations development process in HCFA, SSA

and FSA. 
These OPDIVs differ in the type and volume of
regulations for which they are responsible. 
The HCFA has 
approximately 150 rules in some stage of development at any

FSA. 
given time, as compared with 75 for SSA and 30 for  Well 
over half of HCFA' s rules must be published by a specified

statutory or budget deadline. 
In contrast, few if any SSA or 
FSA rules have external publication deadlines.

As described below, each OPDIV has adapted the process to

meet its own program and organizational requirements. 
Heal th Care Financina Administration

The HCFA has divided responsibility for regulations

development between two offices: the Office of Regulations

Management (ORM) in the Office of Executive Operations and 
the Regulations staff (RS) located in the Bureau of

Eligibility, Reimbursement and Coverage. The ORM manages the

HCFA regulations process, including internal clearances, and

for all matters relating

is the official liaison with  OS/ES 
to regulations development. The RS writes all rules based on

regulation specifications from the responsible Bureau or

files. 
Office and maintains the official regulations 
The ORM coordinates the establishment of publication target

dates for all rules, while ORM and RS develop work schedules

with the responsible Bureau or Office to meet the publication

target dates. 
Both offices maintain automated tracking 
systems capable of providing the status of all pending

regulations instantaneously. These systems produce bi-weekly

status reports for top HCFA management as well as a variety

of other weekly and monthly reports covering every facet of

HCFA regulations.

Social Securi tv Administration

The Division of Regulations within the Office of the Deputy

Commissioner for Policy and External Affairs serves as the

focal point for all SSA regulations activity. While 
specifications are developed by substantive components, the

Division actually writes NPRMs and final regulations, manages

the clearance process, serves as SSA'  and
prepares regulations for publication. s liaison with  OS/ES
In consultation with the affected substantive components, the

Division develops workplans which include a schedule for

completing each step in the development of a regulation. 

automated tracking system enables it to provide monthly

reports to the Commissioner and Deputy Commissioner and bi

weekly reports to affected SSA components on status of

regulations. In addition, bi-weekly meetings are held with
 the SSA Office of General Counsel (OGC) to discuss all

regulations pending in OGC. 
Family SUDDort Administration

The FSA does not have a separate office to coordinate its

regulations activity. Each program component develops policy

specifications, drafts its own rules and establishes its own

target dates. 
The FSA Executive Secretariat (ES) coordinates 
clearances from other FSA components and the OGC, obtains the

Administrator' 
s signature and submits the approved package to
OS/ES. 
The FSAIES has not found it necessary to establish a separate

thin FSA. In fact, 
system to track regulations development wi 
it generally does not become involved with an individual

regulation until i 
t receives the proposed draft from the 
responsible component.

While there is no regular schedule for regulations status

reports, FSA/ES does provide reports to FSA management

officials as needed and when significant events occur. 

the past, such status reports have been issued at

intervals. 
approximately 4 to 6 week 
WHILE TH PROCSS CA BE CUEROME, AL STEPS AR NEDED. 
The current rulemaking process is designed' to insure that all

relevant legal, policy and programmatic issues will be

addressed, that the public will have an opportunity for

input, and that final rules will be well-crafted, high

scrutiny. 
quality products which can withstand close public 
While the process is complicated and many players are

involved, respondents believe strongly that all major steps

and decision points are necessary and reasonable.

HOW LONG DO REGUTIONS ACTALY TAK? 
OPDIV PRSSING TIMS AR DIFFICUT TO MEUR. 
We asked OPDIVs to estimate the length of time usually taken

internally to develop a typical draft rule before submission

to OS/ES for review. The OPDIVs indicated that there are no

typical rules. 
Instead, they feel that each rule is unique. 
Even a rule which all initially agree should be simple and

straightforward can run into problems or complications which

extend the time needed for development. For this reason, 
they saw little value in computing average times spent on

each step. 
The OPDIVs reviewed do not track regulations from the same

starting point. 
The HCFA and the SSA begin tracking when the 
internal decision is made that a regulation is needed. The
 FSAIES begins tracking when it receives the draft regulation

from the substantive component which prepared the draft.

Concerned about the length of time taken to publish some

established an automated tracking

regulations, the 
 19OS8IES 7. 
system in late  The system is designed to monitor
progress on individual regulations as well as identify

problems so that necessary corrective action may be taken. 
The OPDIVs set publication target dates for regulations

without statutory deadlines. 
These decisions are reviewed 
and approved by the Department through review mechanisms

Reaulatorv Proaram  Unified
established for the 

Aaenda  and the 

system begins tracking the regulation when
The  OSIES
agreement is reached to include a rule in one of these

publications. The system has no mechanism for determining

the rule' 
s stage of development before that point. 
If an OPDIV takes longer to draft a rule than originally

planned, the clearance time available once the rule reaches

OS/ES is reduced. Thus, OPDIVs and STAFFDIVs may be asked to

review a complex draft rule which took months or years to

develop in less than a week. 
This situation could be 
alleviated somewhat if the 
 identified and began

OS/ES 
tracking high priority rules as soon as new legislation is

passed. 
Such a practice could also assist OPDIVs in 
prioritizing and planning their regulations workloads.

REEW TIMS  RENED 
HAVE  CONSTAN 
In December 1987,  OS/ES  analyzed the times involved in the
clearance and revision phases of 101 HHS regulations

published during the previous 6 months. Of 
these, 38 were
HCFA rules, 17 were SSA and 9 were published by 
FSA. 
review found that OPDIVs took longer than STAFFDIVs

The  OS/ES 
to clear other OPDIV rules. 
During the 6 months studied,

HCFA reviewed 9 rules averaging 24 days each. 
Both SSA and

FSA reviewed one rule taking 11 days and 10 days,
respectively, to comment. 
in less time. six  Most STAFFDIVs reviewed more rules

STAFFDIVs with the highest volume of
requests to review rules completed their reviews in times

averaging 4. 
1 to 6. 5 days for each rule. The numer of rules
reviewed by these STAFFDIVs ranged from 26 to 
48. 
updated its figures on clearance times for

Recently,  OS/ES 
the period January through March 1988. All three 
OPDIVs
interviewed during the inspection reduced the average time

taken to review and clear other OPDIV 
rules. The HCFA showed
the most dramatic improvement, reviewing 8 draft rules in an

average of 11 days each. 
The FSA reviewed 4 rules
, averaging

5 days each, while SSA reviewed 8 rules
to 9 days each.  , reducing its average

Average STAFFDIV review times remained
constant or increased during this review period. Thus
 despite some fluctuation in individual component review

times 
, the overall average for all components has remained 
relatively constant at less that 8 days for each regulation.

See Appendix B for additional detail.

One reason for longer OPDIV review times is that the OPDIV

process often requires review by several different components

to determine a rule' s impact on their programs. 
Once
completed, the comments must be distilled into a single

response. 
This can be a time consuming process. 
RESION TIMS 
VARY SLIGHTY 
The  OS/ES  review also included the time taken for OPDIVs to 
revise rules after STAFFDIV  results for
IOPDIV review. The 
HCFA, SSA and FSA indicate an average of 23 to 29 days to

complete this step of the process. 
Appendix C provides

addi 
review.
tional detail on this portion of the 
OS/ES 
REEW TIM BA INCRED 
EOMB 
Once approved within HHS, proposed draft and final rules are

reviewed by EOMB. 
Appendix D shows average EOMB review
times 
, by OPDIV, for HHS rules published between June 1987 
and March 1988. The EOMB reviewed 42 HCFA rules, 14 SSA

rules and 11 FSA rules, with review times averaging 44 to 49

days for each rule. 
The EOMB has collected data on the average time taken to

review HHS rules between 1981 and 1986. In 
rul1e98.1 , the EOMB
reviewed 117 rules, averaging 7 days per 
In 1986, a
total of 281 rules were 
reviewed, with an average review time

of 36 days per rule.

Executive Order 12291 requires agencies to allow 60 and 30

days respectively for EOMB review of NPRMs and final versions

of major rules. 
(A major rule is one which is expected to

cost over $100 million annually, or is projected to have

significant effects on employment, inflation or business

competition. 
Non-major rules (both NPRMs and finals) must
be submitted to EOMB at least 10 days prior to publication.

The EOMB reviews maj 
rules.  or rules more quickly than non-
maj or
In 1986, 15 of the 281 rules reviewed were major. 
The EOMB average of 19 days per rule was well within the 30

and 60 day guidelines. 
For the 266 non-major rules, however,

EOMB exceeded the 10 day guideline, averaging 37 days review

time for each rule.  tional detail.
ddi 
See Appendix E for 
 WH DO SOME REGUTIONS TAK 
SO LONG TO PULISH? 
MA  EXT 
FACTRS CA  REGUTION DEVLOPM TIM 
We asked respondents why some regulations take longer to

publish than originally planned. 
The factors mentioned
external as well as internal, are presented below.

Chanaes in Priority 
-- Every OPDIV has more rules than

it can work on at one time. 
Those with higher priority

rules. It is 
are developed before low priority 
not
unusual for a rule to change in priority at some point

during its development. When this 
occurs, workload

shifts can result in some rules being delayed.

ComDlex or Difficult Issues 
-- Some rules deal with

extremely complex issues involving divergent policy

positions. In 
deciding how to proceed, all competing
interests and opinions must be considered and resolved.

This process may involve high level discussions dealing

with Federal fiscal policy and the role of the Federal

Government vis-a-vis State and local governments. 
While
resolution of such issues can be time-consuming, they

must be addressed before a regulation is approved.

pendina Leaislation or Court Decision 
-- Work on a rule

can be held up when legislation or a court decision is

pending on a related topic. 
An SSA regulation was put

on hold for nearly a year while a related issue was

being considered in the U.S. Supreme Court. 
The revised

regulation is currently under development.

ImDact on Mul tiDle Proarams -- When multiple programs
affect . 
the same population, care must be taken to insure 
consistency between program requirements. 
For example

an SSA regulation affecting the Supplemental Security

Income (SSI) 
program may also affect the Medicaid
program administered by HCFA. 
Coordination between 
OPDIVs during rule development is a necessary step which

may, due to different program requirements or competing

workload demands, extend the time needed to draft

proposed rules. 
Pulic 
Hiah Volume of  Comments  -- The sheer volume of

comments received in response to an NPRM can add time to

the revision process. 
One NPRM published by HCFA
generated some 36, 000 comments, all of which had to be

reviewed and addressed in developing the final rule.

External Pressures -- Advocacy groups, industry

organizations 
, and media coverage have had an impact on
the rulemaking process
, sometimes resulting in delays or

al terations to final rules.  CAE STUIES ILLSTRTE TH  RULNG 
COMPLEITY OF 
We reviewed six individual regulations -- two from each OPDIV

in the inspection -- to get a clearer sense of how long

rulemaking actually takes and why delays occur. 
priority rules  Two high

(one of which had a legal deadline) met their
publication target dates. 
As highlighted below, the
remainder encountered a variety of situations which resulted

in substantial delays.

FY 1988 PPS UDdate -- This high priority rule updating

Medicare hospital payment rates was developed and

published in just 9 months, meeting the legal deadline

imposed by Congress. 
The HCFA' s past experience and

familiarity with the need for annual updates, as well as

commitment to quick OS review and comment

OS/ES' 
resolution, may have contributed to the rule'
s timely

development. 
PaYments to Institutions -- Originally an agency

priori ty, this rule's status changed several times

before publication. It was delayed by an inconsistency

with another regulation, consideration of various policy

options and the identification of a paperwork burden.

Nearly 4 years elapsed between publication of the NPRM

and final regulations, due to these and other minor

factors. 
Consultative Examinations -- The legal deadline for this

1985. 
regulation was April  However, a congressional
hearing, changes in paperwork burden decisions and an

unresolved payment issue delayed NPRM publication 2

years until April 1987. The final has not yet been

published. 
MultiDle ImDairments -- This rule was first published as

an interim final in March 1985. Pulic comments 
necessitated development of a new draft. 
A pending

Supreme Court decision put the rule on hold for a year

and the final rule is yet to be published.

Essential Persons -- This agency priority rule was

published as an NPRM 15 months after work began. 
The 
final will clarify the definition of family members

eligible for AFDC benefits under the Essential Persons

provision. At 
the time of our study, FSA was awaiting 
administrative decisions on appropriate responses to the

public comments received.

COBRA ADP -- This low priority rule was delayed twice by

discussions over its necessity and effectiveness before

finally being withdrawn entirely.

See Appendix F for detailed descriptions of these cases.
 DO REGUTIONS TAK TO 
LONG? 
BUET RULS AR 
PULISHED ON TIM 
While all respondents agreed that some regulations have taken

far longer to publish than originally estimated, they also

pointed out that they usually meet publication deadlines for

budget regulations. This 
is true even when there are serious

disagreements or complex issues to resolve. 
Budget regulations are considered to be the highest priority.

It is not unusual for work on other rules to be set aside

temporarily to insure that budget publication deadlines will

be met. 
confirm that publication deadlines
Data from  OSIES
for budget regulations are met in virtually all cases.

OUu!;It  SIGNIFICA RULS AR SOMEIM 
DELAYED 
Pulication 
deadlines for other significant regulations are 
sometimes missed. 
reviewed the
status of HHS commitInm Maercnh 1t98s8,  thte o publish 1O2S/8ES significant

regulations included in the 1987  Reaulatorv Proaram of the

Uni ted States Government  As shown in Appendix G, 37 percent
had been publ ished, 30 percent were not yet due, and 33

percent were overdue. About one-third of the overdue

regulations were delayed for reasons beyond the Department'

control. The remaining two-thirds, or about 20 percent of

the total, are considered by  to be overdue, as there

were no identifiable external OSIiESm  pediments which caused

deadlines to be missed.

LOWE PRORITY RULS OFT TAK 
LONGER TO PULISH. 
The OPDIV representatives interviewed indicated that they

often miss target dates, even for regulations initially

considered to be relatively uncomplicated and

straightforward. This is true 
even in those instances where 
the OPDIV establishes its own preliminary work schedule and

target dates. 
Since this appears to occur 
frequently, it is
possible that for these rules at 
least, the OPDIVs are

underestimating the time and work required and setting

unrealistic target dates.

All respondents were aware of regulations that had taken

several years to publish. 
In general, however, most felt

that with limited staff resources, management must

prioritize the regulations workload, and accept the fact that

lower priority rules will take longer to publish than high

priority rules. 
. They agreed that extended development times
for lower priority rules should not pose maj 
or problems for

the Department. 
Through periodic reviews of those rules 
under development, the OPDIV or OS can reassess its

regulations workload and repriori 
tize as necessary.  S'lNED? 
HOW CA TH PROCSS BE 
While respondents indicated that the current rulemaking

process is generally sound, all agreed that it can be

improved. We received suggestions for streamlining the

process from every respondent interviewed. 
into four areas: early identification of prSiougrgiteystions fell

regulations, early involvement by affected components

increased management accountability and reduced issue

resolution and draft review times.

IDENIFY PRORITY REGUTIONS EAY 
The sheer volume of regulations developed by HHS means that

some will be written sooner than others. 

In some cases, the

with OPDIV and STAFFDIV 
OS/ES,  input, identifies regulations

which are high priority to the Department. 
Before the

responsible OPDIV begins development 
convenes meetings

to identify issues and agree on generaOlS/ ESdirection and

approach. 
Respondents suggested that this be done 
systematically, rather than on the current ad hoc basis. 
The
identification of high priority regulations as soon as

legislation is passed could streamline development of these

rules. 
The same approach can be used wi 
thin each OPDIV  at the

Administrator or Commissioner level, to identify priority
regulations. One OPDIV reviewed is successfully 
approach.  using this

Priori ties are reevaluated during the development of HHS

submissions to the annual 
 Reaulatorv Proaram and the 
semiannual HHS 
 Unified Aaenda  Some respondents suggested

that this reevaluation take place more 
often, to facilitate

quick response to internal and external factors which may

necessitate a change in priorities.

INVOLVE AFFECTD COMPHE EAY IN DEVLOPM 
Several respondents suggested that early STAFFDIV and

affected OPDIV involvement could streamline the process

especially for controversial, high priority or crosscutting

regulations which impact on more than one program or

component. They cautioned, 
however, that a careful balance
must be maintained between early involvement and the OPDIV' 

authori ty to develop its own regulations independently.

One OPDIV reported it seeks OGC input throughout the process

to minimize problems relating to legal sUfficiency. 
Two
OPDIVs with related program responsibilities have entered

into an agreement to share early drafts at the staff level on

rules which impact on the other'
s programs. This is 
seen as

one way to identify potential program inconsistencies early
 in the process.  , it
Given the success of this approach
may 
be beneficial for all OPDIVs with related program 
responsibilities to adopt the practice of sharing early

drafts for review and comment.

In addition, there are some instances when it would be

helpful to have comments from OPDIVs and STAFFDIVs in the

early stages of regulation development. 
is the
logical unit to coordinate early involvemeThen  t oOS/fES  this nature

possibly through a process of simultaneous review and comment

before formal submission of the rule by the lead OPDIV to 
OS. 
BOlD OPDIV MAAGEI 
ACCOUNABLE 
Along with prioritizing the regulations workload, several

respondents saw a need for OPDIV heads to hold their managers

accountable for timely completion of high priority rules.

One OPDIV has demonstrated top management'
s commitment to

timely rulemaking by incorporating a timeliness element into

the performance plans of senior management staff. 
The same

OPDIV has included timely review of draft rules in OGC

performance plans. 
The OGC review step had been identified

as one where delays were likely to 
occur. The OGC response

times improved immediately after this action was taken.

Discussions of progress on priority regulations at senior

staff meetings is seen as another way to convey top

management' 
s commitment to timely rulemaking. 
IHTAL 
REDUCE  OPDIV ISSUE REOLUION AN DRA REEW TIM 
The OPDIV respondents identified several approaches which

have been used successfully to reduce internal processing

times. 
One OPDIV requires that an issue which cannot be 
resolved at the staff level within a certain period of time

level. 
be elevated to the next 
This process of elevating
unresolved issues continues until a decision is 
made. 
All three OPDIVs save time by doing concurrent rather than

sequential reviews. 
One OPDIV does this for all rules; the
other two use the technique only for high priority rules

which need to be published quickly. 
All OPDIVs felt that

concurrent reviews have been effective and should continue.

Virtually all draft regulations are returned to the OPDIV for

revision after the initial 
review. For 
minor technical

revisions, one OPDIV saves time by delegating approval

authority to senior policy officials. Substantive revisions
however 
, still require approval by the OPDIV head. 
The OPDIVs may wish to consider these and other ways to

reduce internal processing times.
 RECOMMATIONS

should: 
The  OS/ES 
develop a systematic process to identify and begin

tracking high priority regulations as soon as new

legislation is passed; and

establish a mechanism to systematically seek early

invol vement of 
affected components, both OPDIVs and
STAFFDIVs , in issue identification and development of 
high priority regulations.

The OPDIVs should:

hold top managers accountable for timely regulations

development by incorporating elements on timeliness in

their merit pay plans; and

take steps to reduce internal issue resolution and draft

review times.  APPENDICES

APPENIX 
LAWS AND EXECUTIVE ORDERS AFFECTING

DEVELOPMENT OF FEDERAL REGULATIONS

CLECE 
AVERAGE  TIME 
(DECEMBER 1987 AND MACH 1988) 
REISION OF 
REGULATIONS 
11124/87) 
(Regulations revised  6/1/87 
AVERAGE REIEW TIME AT OMB 
(Regulations published June 1987-March 
1988) 
AVERAGE EOMB REVIEW TIME FOR HHS RULES

(Maj or and Non-maj or rules) 
SELECTED CASE STUDIES

FY 1988 PPS UPDATE 
PAYMNTS TO INSTITUIONS 
CONSULTATIVE EXAINATIONS 
MULTIPLE IMPAIRMNTS 
DEFINITION  OF ESSENTIAL PERSONS 
COBRA ADP

1987 REGULATORY PROGRA, 
STATUS OF HHS COMMITMNTS -- MACH 1988  APPENDIX A

LAWS AN EXECUIV ORDER AFFECTING DEVLOPM
OF FEDER 
REGUTIONS 
Federal Reaister Act of 1935 
-- Established a uniform system

for handling regulations
, including submitting documents to

the Office of the Federal Register; placing documents for

pRubleic ginsipsecttieon;r p ublishing documents in the 
 Federal
Reaulatio; nands c odifying rules in the  Code of Federal
Administrative Procedure Act of 1946

-- Gave the public the

right to participate in the rulemaking process by requiring

agencies to publish certain rules initially as proposals and

to consider public comments; also required that the effective

date for a regulation be not less than 30 days from the

publication date unless there is good cause for an earlier

date. 
Grant programs are specifically exempted from these
requirements. 
PaDerwork Reduction Act of 1980

-- Established policies and

procedures to control paperwork burdens imposed on the publ 

by Federal agencies.

Reaulatorv Flexibilitv Act of 1980

-- Required Federal

agencies to reduce the burden of government regulations and

paperwork requirements on small business
, small organizations

and small governmental jurisdictions. 
regulations  In developing

, agencies must identify those rules which will 
have a significant economic impact on a substantial 
numer of
small entities.

Executive Order 
12291. issued Februarv 
17. 1981
Established new requirements to reduce the burden of

regulations 
, increase agency accountability for regulatory
actions and insure that regulations are cost beneficial. 

also strengthened the oversight role of EOMB in the

regulatory process. 
Major provisions include: 
Agencies must determine whether a proposal meets the

threshold criteria for a "major rule. 
" A major rule is
one likely to result in: 
annual effect on the economy of $100 million or

more; 
maj or cost increases for consumers, industries,

units of government or geographic regions; and
 APPENDIX A

Page 2

significant adverse effects on competition

employment, investment, producti 
vi ty, innovations
or the ability of u.s. businesses to compete with

foreign businesses.

All notices of proposed rulemaking 
(NPRMs), final rules

and interim final rules must be submitted to EOMB for

review. 
Each agency must publish a  Semi-Annual Unified Aaenda of

Reaulations 
in the  Federal Reaister in April and October
of each year. 
Unified Aaenda contains all rules the

The 
agency plans to work on during the next 6 months.

Executive Order 
12498. issued Januarv 4. 1985 
-- Required
annual publication of the  Reaulatorv Proaram of the United

States Government  The purpose of this publication was to

improve regulatory decisionmaking and coordination within the

executive branch, and to provide Congress and the public with

an advance view of the most important regulatory decisions

for the forthcoming year.
 !:j  1c1
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( APPENDIX E

AVEGE EOMB REEW TIl FOR BH RULS 
MAOR AN HOH-MAOR RULS 
RULS  AVEGE REEW 
DAYS
REEWD  Major  All 
Hon-Maj or 
1981  117

1982  272

1983  294

1984  198

1985  212

1986  281

SOURCE : Realatorv Proaam of the united States Governent 
31, 1988, Appedix 4, 
April 1, 1987 - March  paqes
626 and 632.  APPENDIX F

SELECTED CASE STUDIES

All respondents interviewed made a point of emphasizing that

there is no such thing as an average or typical regulation.

The cases presented be ow illustrate just how different one

regulation can be from another. We selected a total of six

case studies -- two from each OPDIV included in the

inspection. 
Examples 1. and 5. are high priority rules which,
al though involving 
complex issues, were published by the legal
or internally established deadline. 
The remaining examples 
illustrate a few of the many possible causes for delay. 
Title 
FY 1988 PPS UPDATE 
Leaal Deadline  Implementation:  Sept. 1, 1987 
NPRM :  June 1, 1987 
Final Rule:  Sept. 1, 1987

NPRM Published  June 10, 1987

Final Pulished 
: September 1, 1987 
Total Time ElaDsed  9 months

Maior Reasons for Delav  None 
Medicare legislation requires annual payment rate updates

system 
for the hospi tal prospective payment  (PPS). The
current PPS rule established payment rates applicable for
FY 1988. 
Development of this rule began in HCFA in January 1987. 
The proposed rule was circulated within HCFA March 2 and

was cleared in less than a week. 
In April, the rule was 
for clearance. 
Clearance was completed 
submitted to  OSIES 
quickly and OS approval was accomplished in just over 2

weeks. 
The rule was at EOMB for nearly a month while HCFA

s policy options. 
addressed EOMB'  It was published as an 
NPRM on June 10, 1987.

Work on the final package began immediately. A total of

200 comments had been received when the public comment

11. All 
period ended August  comments were considered and 
the final rule was circulated throughout HCFA in 24 hours. 
The OS and EOMB review began August 20 and was completed

in a week. 
The final rule was published in the lB 
September 1, 1987.  APPENDIX F 
Page 2

Title 
PAYMNTS TO INSTITUIONS
Sianificance 
Agency Priority 
NPRM Pulished  March 13, 1985

Final Pulished 
February 8, 1988 
Total Time ElaDsed: 5 years, 9 months

options to 
Maior Reasons for Delav: Various policy 
consider, paperwork burden.

The Payments to Institutions (PTI) rule allows States to

deduct non-covered medical expenses from an

institutionalized Medicaid recipient's income in

determining how much income to apply to the cost of

care. 
insti tutional 
Prior regulations made such
deductions mandatory. 
The rule also implements a 
Pulic 
provision of  Law 99-272 which requires States 
using a special income standard for institutionalized

individuals to begin Medicaid eligibility on the first day

of a period of at least 30 consecutive days of

institutionalization. 
The first draft of the proposed rule was completed in May

July. 
1982 and internal clearances began in  In August,
various policy options were considered. 
The HCFA 
Administrator approved the regulation in May 1983. 
The OS approval process, including comment resolution,

took several months. In July 1983, two STAFFDIVs raised 
concerns which led to HCFA revisions. Revised cost

estimates had to be developed and the entire package was

recleared within HCFA. 
The revised rule was submitted to 
OS in December.

The OS comments reached HCFA in January 1984 and the

regulation was revised. The rule was cleared within HCFA 
once again and submitted to OS in September. The

Secretary approved it October 2, 1984.

3. 
The EOMB received the NPRM October  In its comments to 
HHS at the end of November, EOMB raised significant policy

options. The NPRM was revised by HHS and reviewed again

March 13, 1985. 
by EOMB before being published in the 

draft 
The NPRM comment period ended May 20, 1985. The 
final was completed in December and HCFA circulation beqan

in March 1986. 
The COBRA of 1985 necessitated development 
of new cost estimates and impact data.
 APPENDIX F 
Page 3

In June 1986, in response to a request for complete

reanalysis and revision from a substantive component, the

package was reworked. The revised package was submitted

to the HCFA Administrator in September, but identification

of a paperwork burden held up final approval until

December 1986. 
The OS received the PTI regulation from HCFA in mid-

February 
December. In  1987, the OS raised various policy 
concerns. The HCFA revised the rule and developed new

data. 
cost estimates and impact  The HCFA cleared these 
changes in July 1987. 
The Secretary approved the final rule in November 1987. 
It was reviewed by EOMB and was published in the 

February 8, 1988.  APPENDIX F 
Page 4

Title 
CONSULTATIVE EXAINATIONS 
Leaal Authoritv  1984 Disability Amendments

Leaal Deadline  April 8, 1985

April 
NPRM Pulished  20, 1987 
Total Time ElaDsed: 3 years, 8 months

Maior Reasons for Delav: Paperwork burden*, policy

issues, and major revisions following a congressional

hearing. 
Consultative Examinations (CEs) are medical examinations

purchased from private physicians to assist in making

Social Security disability determinations. 
The proposed 
rule would establish standards for determining when a CE

is needed. It also prescribes the types of referrals to

be made, the referral process and monitoring procedures.

The SSA began work on the CE rule in mid-October 1984. 
Internal clearance of the NPRM was completed in April 1985

-- 2 weeks after the legal publication deadline. 
In May 
1985, OS and SSA determined jointly that the rule involved

a paperwork burden. The draft rule was revised to remove

the burden. 
Nevertheless, in November 1985, further 
paperwork burden concerns had to be considered.

A month later, results orfu lae c.o ngressional hearing required

major revisions to the  The revisions were recleared 
in HHS and submitted to EOMB in April 1986, where it was

again found to have a paperwork burden. Three more months

passed while the rule was recleared.

In August 1986, the rule was revised again in response to

various policy questions. 
In February 1987, the rule was 
submitted to OS and EOMB. Reviews were completed within 3

months and the NPRM was published April 20, 1987.

As of mid-February 1988, the draft final was being

circulated with SSA for internal review. The target date

for final publication is September 1988. 
*The Paperwork Reduction Act of 1980 requires Feidcer.a l agencies

to control paperwork burden imposed on the publ  When a 
determination is made that the proposed rule has a paperwork

burden, the agency must change the rule to eliminate the burden

or obtain EOMB approval before publication. Either course of

action can involve substantial additional workload.
 APPENDIX F 
Page 5

Title 
MULTIPLE IMPAIRMNTS 
Leaal Authority  1984 Disability Amendments

Interim Final Rule Published  March 5, 1985

Total Time ElaDsed  3 years, 6 months

Maior Reason for Delay  Pending Supreme Court

year. 
decision delayed action for one 
The Multiple Impairments (MI) regulation states that in

determining disability SSA now considers the combined

I s 
severi ty of a person  impairment rather than assessing 
the effect of each impairment separately.

Work began on this rule in October 1984. It was first

published as an interim final on March 5, 1985 with a 60

day comment period. The draft final was completed in

December 1985 and circulated within SSA for comments. All 
1986. Internal 
comments were received by mid-March  SSA 
clearance of the revised final was nearly complete by

August 
1986, when SSA was notified that the Justice 
Department did not want the MI rule published until the

Supreme Court issued its decision on a related case.

Consequently, the MI rule was put on hold for almost a

I s decision. 
year pending the Supreme Court 
The Supreme Court rendered its decision in July 1987. 
Later that month, SSA staff met to discuss how to proceed

with the final in response to the Supreme Court decision.

The revised rule was being cleared internally by mid-

October 1987. 
Since that time, SSA has been considering whether a final

rule is needed or whether the interim final is sufficient

to implement the Supreme Court decision. As of March 
issue. 
1988, a final decision had not been made on this  APPENDIX F 
Page 6

tIe 
Ti  DEFINITION OF ESSENTIAL PERSONS 
NPRM Pulished  October 5, 1987

Total Time ElaDsed  1 year, 3 months

Maior Reasons for Delav  None 
Essential Persons (EP) was originally part of a

regulations package developed at the request of the FSA

Administrator under the title, "Least Costly.
 The 
purpose of the rule is to make more restrictive the

definition of a person considered essential to a family

receiving benefits under the Aid to Families with

Dependent Children (AFDC) program. The designation of

essential person status allows the State to provide for

the needs of an otherwise ineligible individual. The

loose definition of this term in existing regulations has

permitted States to include any household member as 

essential person.

The rule would eliminate benefits for certain individuals

currently included as an essential person, as well as

ineligible. 
making some AFDC families 
Thus, it has the
funds. 
potential for savings in Federal  For these 
reasons, a decision was made to develop the EP as a

separate rule. 
Work began on the EP rule in August 1986. The completed
draft rule was circulated within FSA in November 
1986.
The FSA circulation and revision process was finished in

January 1987 and the rule was sent to OGC for clearance on

January 13. After further revisions, the package was

recleared by FSA in mid-May 1987. 
Clearance in OS began June 1, 1987 and was
 completed
August 9. The EOMB reviewed revisions and reclearance in 
FSA and OS was necessary. The OS approval 
came in mid-

September. The NPRM was then submitted to EOMB and was

October 5, 1987. 
published in the 
 APPENDIX F 
Page 7

Title 
COBRA ADP 
Leaal Authority  Consolidated Omnibus Budget

Reconciliation Act 
(COBRA) of 1985
Total Time ElaDsed  1 year 
, 7 months
Ma;or Reasons for Delay 
Held at EOMB for 5 months,

debate over need to regulate. 
A provision of COBRA 1985 requires the Secretary to recoup

the incentive portion of Federal funding expended by a

State for automated data processing 
(ADP) systems

development if that State does not implement its system by

the date specified in its advance planning document. 
The
effective date of this provision is April 7
, 1986 and

incentive funding can be recovered only as far back as

that date.

Discussion on the need for this regulation began in April

1986. 
The Family Assistance Management Informations
Systems 
(FAMIS) program funds States to develop ADP
systems. The 
FAMIS had previously been amended to allow

FSA to suspend a State' s proj ect 
and retrieve the
incentive portion of Federal money if the State did not

meet its planned milestone dates.

In July 1986, FSA decided to proceed with the rule. 
The
draft was submitted to OGC on May 8
, 1987 and reviewed in

OS 3 weeks later. 
The rule was revised in response to

comments received and cleared by OS at the end of June.

On July 9, the rule was submitted to EOMB where it

remained for 5 months. 
On December 24 , EOMB requested

that the regulation be withdrawn because the existing

FAMIS regulation are more specific and effective. 

The FSA 
withdrew the rule in early 
1988.  8 
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