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Understand the Burden of Government Healthcare Regulation

April 1, 2021
April 1, 2021

This blog post is the first of three excerpts from our recent article, “Easing the Burden: Healthcare Providers Are Crying Out for Regulatory Relief. Is the Government Listening?”

“Patient safety and positive outcomes are at the center of what we do.”

That phrase, or one similar to it, could be attached to any marketing or advertising material put out in the healthcare world. Few, if any, providers would take exception. Indeed, patient safety does reside at the core of healthcare, and is ensured not only by professional and well-trained providers and competently run healthcare systems, but it is also safeguarded by a vast number of local, state, and federal regulations.

That’s the area where there is some conflict. The regulatory landscape, particularly at the federal level, has become increasingly cumbersome, conflicted, and difficult to navigate. This burden has resulted in providers and systems saying they are spending too much time ensuring compliance, taking them away from their primary mission of providing care.

The problem has been thoroughly examined and most recently documented in a report from the American Hospital Association: “Regulatory Overload: Assessing the Regulatory Burden of Health Systems, Hospitals and Post-acute Care Providers” (AHA, Regulatory Overload, 2017). In its research, the AHA digs into the tension between providing high-quality care and the agencies charged with governmental oversight, and how those two groups often collide rather than work in tandem.

“Federal regulation is largely intended to ensure that health care patients receive safe, high-quality care. In recent years, however, clinical staff — doctors, nurses and caregivers — find themselves devoting more time to regulatory compliance, taking them away from patient care. Some of these rules do not improve care, and all of them raise costs,” the AHA stated in its report summary. “Patients also are affected through less time with their caregivers, unnecessary hurdles to receiving care, and a growing regulatory morass that fuels higher health care costs.” (AHA, Regulatory Overload, 2017).

Numbers and Costs Tell a Startling Story

The AHA research picked apart the healthcare system to divide it into nine domains:

  • Quality reporting
  • New models of care/Value-Based Payment models
  • Meaningful use of electronic health records
  • Hospital conditions of participation (CoPs)
  • Program integrity
  • Fraud and abuse
  • Privacy and security
  • Post-acute care
  • Billing and coverage verification requirements

Within those, it found that health systems, hospitals, and post-acute care providers must comply with 629 discrete regulatory requirements. Those split almost evenly, with 342 oriented toward hospitals and 288 toward the post-acute system. The regulations are promulgated primarily by 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). There are other federal agencies, however, who do have regulatory oversight (AHA, Regulatory Overload, 2017).

What does this mean out in the “real world?” A lot of time spent making sure that myriad data is not only tracked but documented and archived in such a way that it can be accessed for verification. That takes time, staff, and money. According to one summary of the report (Burke, 2017):

  • Health systems, hospitals, and post-acute providers collectively spend nearly $39 billion a year on the administrative activities related to regulatory compliance.
  • The regulatory burden equates to an average cost of $1,200 per patient admitted, or $47,000 per hospital bed, per year.
  • On an individual hospital basis, hospitals that are part of larger systems incurred a total of $5.1 million in costs per hospital, compared to $8 million for individual hospitals that were not part of a system.
  • Health systems, hospitals, and post-acute providers must comply with more than 600 discrete regulatory requirements with the greatest number found in the areas of: Conditions of Participation, Privacy and Security Rules, and Quality Reporting
  • An average-size hospital dedicates 59 employees to regulatory compliance.
  • Fraud and abuse requirements are outdated and have not evolved to support new models of care.

The AHA called out the frequency and pace of regulatory change as a major issue in compliance. By noting that “as new or updated regulations are issued, a provider must quickly mobilize clinical and non-clinical resources to decipher the regulations and then redesign, test, implement, and communicate new processes throughout the organization,” it showed how increasing regulation causes ongoing upheaval in the clinical setting as compliance is sought and achieved. The report also squared off against Meaningful Use, the rollout of which it says is requiring the average-sized hospital to spend nearly $760,000 annually to meet administrative requirements, as well as $411,000 in related upgrades to systems during that same 12-month period — 2.9 times more than IT investments for any other domain. (AHA, Regulatory Overload, 2017).

Future Installments of this series will cover:

  • More Problems, and Maybe Potential Paths Forward
  • CMS Responds with Rule Changes and Request for Input
  • One Way, Many Ways, or Any Way Forward?

References

AHA, “Regulatory Overload.” (2017, November 03). Retrieved August 2018, from https://www.aha.org/guidesreports/2017-11-03-regulatory-over­load-report)

Burke, D. (2017, November 03). AHA Report: Healthcare Providers are Being Crushed by Regulatory Burdens. Retrieved August, 2018, from http://wallerhealthcareblog.com/post/171/aha-report-healthcare-providers-are-being-crushed-by-regulatory-burdens/1

CMS, “CMS Finalizes Changes to Empower Patients and Reduce Administrative Burden.” (2018, August 2). Retrieved August, 2018, from https://www.cms.gov/newsroom/press-releases/cms-finalizes-changes-empower-patients-and-reduce-administrative-burden

McCanne, D., MD. (2017, October 27). “The cost of regulatory overload.” Retrieved August, 2018, from http://pnhp.org/blog/2017/10/27/the-cost-of-regulatory-overload/

Marshall, M. (2018, February 7). “How Health Care’s Regulatory Landscape is Shifting in 2018.” Retrieved August, 2018, from https://www.cerner.com/blog/how-health-cares-regulatory-landscape-is-shifting-in-2018

Monica, K. (2018, May 7). CMS Working to Change Status Quo of High Administrative Burden. Retrieved August, 2018, from https://ehrintelligence.com/news/cms-working-to-change-status-quo-of-high-administrative-burden