Editor’s Note: Every day, health systems, hospitals and post-acute care (PAC) providers—such as long-term care hospitals, rehabilitation facilities, skilled nursing facilities and home health agencies—confront the daunting task of complying with a growing number of federal regulations. To quantify the level of administrative impact of this regulatory burden, Manatt Health worked with the American Hospital Association (AHA) on a comprehensive review of federal law and regulations in nine regulatory domains from four federal agencies—the Centers for Medicare & Medicaid Services (CMS), the Office of Inspector General (OIG), the Office for Civil Rights (OCR) and the Office of the National Coordinator for Health Information Technology (ONC). Key findings and opportunities to reduce regulatory burden are summarized below. Click here to download the full report.

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Federal regulation is largely intended to ensure that patients receive safe, high-quality care. In recent years, however, doctors, nurses and other caregivers find themselves devoting more time to regulatory compliance, taking them away from patient care. Some of the federal rules do not improve care, and all increase costs. Patients also are affected through less time with their caregivers and unnecessary hurdles to receiving care.

In a new study for the AHA to assess regulatory burden, Manatt Health interviewed 33 executives at four health systems, and conducted a survey of 190 hospitals that included systems and hospitals with PAC facilities.

Major Findings

1. Health systems, hospitals and PAC providers must comply with 629 regulatory requirements across nine domains.CMS, OIG, OCR and ONC are the primary drivers of federal regulations impacting these providers. However, providers also are subject to regulations from other federal and state entities not accounted for in our report.

2. Hospitals, health systems and PAC providers spend nearly $39 billion a year solely on administrative activities related to regulatory compliance across the nine regulatory domains covered in the report. The nine regulatory domains studied include quality reporting, value-based payment models, meaningful use of electronic health records, hospital conditions of participation (CoP), program integrity, fraud and abuse, privacy and security, PAC, and billing and coverage verification requirements. Looked at another way, regulatory burden costs $1,200 every time a patient is admitted to a hospital.

3. An average-size hospital dedicates 59 full-time employees (FTEs) to regulatory compliance, over one-quarter of which are doctors and nurses, pulling clinical staff away from patient care responsibilities. PAC regulations require an additional 8.1 FTEs.

4. The timing and pace of regulatory change make compliance challenging. The frequency and rate with which regulations change often results in duplication of efforts and substantial amounts of clinician time away from patient care.

5. Among the nine areas investigated, providers dedicate the largest portion of resources to documenting CoP adherence and billing/coverage verification processes. More than two-thirds of FTEs associated with regulatory compliance are within these two domains, which also represent 63% of the total average annual cost of regulatory burden.

6. Meaningful use (MU) has spurred provider investment in IT systems, but exorbitant costs and ongoing interoperability issues remain. The average-size hospital spends nearly $760,000 annually to meet MU administrative requirements annually. In addition, an average-size hospital invests $411,000 in related upgrades to systems during the year, over 2.9 times more than the IT investments made for any other domain.

7. Quality reporting requirements are often duplicative and have inefficient reporting processes, particularly for providers participating in value-based purchasing models. An average-size community hospital devotes 4.6 FTEs—over half of whom are clinical staff—and spends approximately $709,000 annually on the administrative aspects of quality reporting.

8. Fraud and abuse laws are outdated and have not evolved to support new models of care. The Stark Law and Anti-Kickback Statute (AKS) can be impediments to transforming care delivery. While CMS has waived certain fraud and abuse laws for providers participating in various demonstration projects, those who receive a waiver generally cannot apply it beyond the specific demonstration or model. The lack of protections extending care innovations to other Medicare patients or Medicaid and commercially insured beneficiaries minimizes efficiencies and cost savings realized through these types of models and demonstration projects.

General Opportunities to Reduce Burden

A reduction in administrative burden will enable providers to focus on patients, not paperwork, and reinvest resources in improving care and health, as well as reducing costs. Given these findings, we have several recommendations to reduce administrative requirements without compromising patient outcomes.

  • Regulatory requirements should be better aligned and consistently applied within and across federal agencies and programs and subject to routine review for effectiveness to ensure the benefits for the public good outweigh additional compliance burden.
  • Regulators should provide clear, concise guidance and reasonable timelines for the implementation of new rules.
  • CoPs should be evidence-based, aligned with other laws and industry standards, and flexible in order to support different patient populations and communities.
  • Federal agencies should accelerate the transition to automation of administrative transactions, such as prior authorization.
  • Meaningful use requirements should be streamlined and should increasingly focus on interoperability, without holding providers responsible for the actions of others.
  • Quality reporting requirements should be thoroughly evaluated across all programs to better determine what measures provide meaningful and actionable information for patients, providers and regulators.
  • PAC rules should be reviewed and simplified to remove or update antiquated, redundant and unnecessary rules.
  • With new delivery system and payment reforms emerging, Congress, CMS and OIG should revisit the Stark Law and AKS and their respective regulations, as well as other requirements aimed at combating fraud, and make meaningful changes to ensure that statutes provide the flexibility necessary to support the provision of quality, high-value care.

The AHA also has put together recommendations for immediate relief. These are listed in the full report and described in greater detail in AHA letters to President Trump, CMS and Congress, available at www.aha.org/regrelief.