Health care regulatory burdens costs $39B per year, AHA says

To quantify the level and impact of the regulatory burden on America’s health care system, the American Hospital Association (AHA) in conjunction with Manatt Health conducted a comprehensive study of federal law and regulations in nine regulatory domains from four federal agencies. Among the findings of the study were that health systems, hospitals and post-acute care (PAC) providers must comply with 629 discrete regulatory requirements across nine domains, that the average size hospital dedicates 59 full time employees (FTEs) to regulatory compliance, the cost to providers for regulatory compliance is nearly $39 billion, and, perhaps most significant: some of the rules do not improve patient care but all of them raise costs.

Background

Every day, health systems, hospitals and post-acute care (PAC) providers—such as long-term care hospitals, inpatient rehabilitation facilities, skilled nursing facilities and home health agencies—confront the daunting task of complying with a growing number of federal regulations. Federal regulation is largely intended to ensure that health care patients receive safe, high-quality care. In recent years, however, clinical staff, including doctors, nurses and caregivers, find themselves devoting more time to regulatory compliance, thereby taking them away from patient care. Some of these rules do not improve care, and all of them raise costs. Patients are adversely affected through less time with their caregivers, unnecessary hurdles to receiving care, and a growing regulatory morass that fuels higher health care costs.

Why the AHA conducted the review

The AHA conducted a comprehensive review of federal law and regulations in nine regulatory domains from four federal agencies in order to quantify the level and impact of regulatory burden. Their report seeks to inform policymakers, lawmakers, and the public about the administrative impact federal regulatory requirements have on the ability of health systems, hospitals, and PAC providers to furnish high quality patient care, and to offer a starting point for discussions on implementing meaningful regulatory reform. Reducing regulatory requirements that do not contribute to improved patient care will enable providers to focus on patients, not paperwork, and reinvest resources in improving care, improving health, and reducing costs.

How the AHA conducted the study

The study included interviews with 33 executives at four health systems, and a survey of 190 hospitals that included systems and hospitals with PAC facilities. The researchers examined the Federal Register and the U.S. Code of Federal Regulations for regulations impacting hospitals and PAC providers across the nine domains. They then reviewed each section of the regulations and identified discrete regulatory requirements that generate one or more administrative activities, such as:

  • creating, revising or expanding administrative policies and work flows;
  • documenting and monitoring compliance with policies and work flows;
  • hiring staff, consultants and vendors to support administrative compliance activities, such as extracting and reporting data;
  • developing and conducting trainings on administrative requirements for clinical and nonclinical staff;
  • issuing or revising and disseminating new patient notices; and
  • interpreting and identifying the compliance risks associated with new regulations; and, purchasing or upgrading health IT.

Significant findings

Among the major findings of the study were the following:

1. Health systems, hospitals and PAC providers must comply with 629 discrete regulatory requirements across nine domains, including 341 hospital-related requirements and 288 PAC-related requirements.
2. Health systems, hospitals and PAC providers spend nearly $39 billion a year solely on the administrative activities related to regulatory compliance in these nine domains. An average-sized community hospital (161 beds) spends nearly $7.6 million annually on administrative activities to support compliance with the reviewed federal regulations.
3. An average size hospital dedicates 59 FTEs to regulatory compliance, over one quarter of which are doctors and nurses.
4. The timing and pace of regulatory change make compliance challenging, while the frequency and pace with which regulations change often results in the duplication of efforts and substantial amounts of clinician time away from patient care.

Review recommendations

The AHA study identified specific activities which Congress and the Administration should take immediately to reduce regulatory burden and enhance care coordination, without negatively impacting patient care. These include:

  • Suspend the faulty hospital star ratings from the Hospital Comparewebsite.
  • Cancel Stage 3 of meaningful use of electronic medical records.
  • Suspend all regulatory requirements that mandate submission of electronic clinical quality measures.
  • Rescind the long-term care hospital 25 percent rule and instead rely on the site-neutral payment policy to bring transformative change to the field.
  • Restore compliant codes that count to the inpatient rehabilitation facility 60 percent rule.
  • Eliminate the “96-hour rule” as a condition of payment for critical access hospitals.
  • Modify Medicare conditions of participation to allow hospitals to recommend post-acute care providers.
  • Create a new exception that protects any arrangement that meets the terms of an Anti-Kickback Statute safe harbor for clinical integration arrangements.

The AHA’s recommendations were more fully described in letters sent to President Trump, CMS, and Congress.