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.


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.

CMS creates new Hospital Improvement and Innovation Networks to improve safety and reduce readmissions

CMS is planning to further strengthen patient safety, improve hospital care quality and reduce readmissions by creating a series of Hospital Improvement and Innovation Networks (HIINs), according to a blog post by CMS Chief Medical Officer Patrick Conway, M.D. The HIINs will continue the work of the Hospital Engagement Networks (HENs), which are part of the Partnership for Patients under the umbrella of the Quality Improvement Organization (QIO) program.


According to Conway, HIINs will “tap into the deep experience, capabilities and impact of QIOs, hospital associations, hospital systems, and national hospital affinity organizations with extensive experience in hospital quality improvement.” The networks will work to engage and support hospitals, patients, and their caregivers to implement and spread best practices to hospitals at a national scale. The goal of HIINs is that through 2019, new HIINs will work to achieve a 20 percent decrease in overall patient harm and a 12 percent reduction in 30-day hospital readmissions as a population-based measure (readmissions per 1,000 people) from the 2014 baseline.

Section 3025 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) included provisions to help hospitals reduce readmissions and keep patients safe. To date, there has been success in reaching this goal. Conway emphasized the findings of a recent Agency for Healthcare Research and Quality (AHRQ) report, which found “an unprecedented 39 percent reduction in preventable patient harm in U.S. hospitals compared to the 2010 baseline,” and that CMS’ current efforts have “resulted in 2.1 million fewer patients harmed, 87,000 lives saved, and nearly $20 billion in cost-savings from 2010 to 2014” (see Thousands of lives, billions of dollars saved by Affordable Care Act, December 2, 2015). Conway also pointed out substantial progress has also been made in reducing 30-day hospital readmissions. In light of so much success, CMS is looking to further its reach.

Request for Proposals

CMS issued a request for proposals (RFP) for HIINs, which is open to all organizations, including those who operated under the HEN banner in Partnership for Patients’ first and second rounds. Conway noted that CMS is encouraging all interested parties to submit a proposal for a “full and open competition” that “will continue to build on the successes achieved so far.”

Do patient safety indicators provide the full picture?

Common indicators used to rate hospital safety, such as the Agency for Healthcare Research and Quality’s (AHRQ) Patient Safety Indicators (PSIs) and CMS Hospital-acquired Conditions (HACs) may not accurately portray quality of care, according to a new study.  The study, which comes from Johns Hopkins Armstrong Institute for Patient Safety and Quality was published in Medical Care, and found that only one out of 21 measures used by these agencies met the criteria for being a true indicator of hospital safety. The problem is, however, that they are being used more and more frequently, despite concerns over their accuracy.

The study found that these indicators are being used for pay-for-performance and public reporting, including Leapfrog’s Hospital Safety Score and CMS’ Star Ratings.  Because of their  potential to misinform patients and wrongly classify hospitals serious harm could ensue. Hospitals could experience financial problems and also harm to their reputations if the wrong data are projected. The study emphasized that the indicators need to be rigorously evaluated because of these issues.

Part of the problem, the study suggests, is that the measures were created more than a decade ago. Further, that data is pulled from billing data and not actual clinical data, which could be traced back to patient health records. The researchers also pointed out that certain factors tied to medical coding and human error could potentially make the results unreliable.

The researchers looked at studies run from between January 1, 1990 and January 14, 2015 that addressed the validity of the HAC measures and PSIs.  They found that in 80 percent of cases the data used in the studies matched. Of the 21 measures created by AHRQ and CMS, 16 of those did not have enough data to be evaluated. Only five of the measures contained enough data for it to have a positive predictive value, meaning it could evaluate a useful measure in an accurate manner. Out of those five, however, only one was valid for use today.

With the odds being a 21 and one record, the bet is against the hospitals when it comes to the usefulness of these indicators. Should these types of indicators remain in use, they will need to be thoroughly evaluated and tied to measures that are also checked over time.



IBM poised to conquer health data analytics with Truven acquisition

IBM entered into a $2.6 billion agreement to buy Truven Health Analytics, a provider of cloud-based health care data that informs benefit decisions for one in three Americans. The purchase will bring more than 8,500 clients to IBM’s Watson Health portfolio, including  federal and state government agencies, employers, health plans, hospitals, clinicians and life sciences companies. The acquisition will make IBM one of the world’s leading data, analytics, and insight companies.

This will be IBM’s fourth major health-related acquisition since launching Watson Health in April 2015, following acquisitions of Phytel (population health), Explorys (cloud-based health care intelligence), and Merge Healthcare (medical imaging).

How can large amounts of data improve care?

The increasing prevalence of value-based care under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) necessitates the use of large amounts of data to drive the improvement of health outcomes for patients at lower costs. In order for data analytics to work, providers, payers, and other stakeholders must document how specific elements of care contribute to achieving a certain health outcome at a given cost. The increasing complexity of the health industry, paired with the government’s focus on improving the quality and lowering the cost of care, requires health care providers to make smarter, more informed decisions.

Consumers also expect more access to information and increased accountability from their doctors, nurses, and health plans, so providers are turning to big data and predictive analysis to improve patient care and control costs.

Data analytics is “the systematic use of data and related business insights developed through applied analytical disciplines (e.g., statistical, contextual, quantitative, predictive, cognitive, and [other models]) to drive fact-based decision making for planning, management, measurement, and learning,” according to a report by IBM. Analytics may be used to describe trends, predict outcomes, or prescribe actions. In health care, data analytics can help providers observe trends in both the patient’s own medical record, as well as records of patients with similar histories, to predict an individual patient’s level of risk for a given medical outcome. Doing so can help to avoid erroneous diagnoses and unnecessary procedures and aid in the provision of more individualized care.

IBM’s robust aggregation of data

IBM showed in a report detailing the use of analytics in health care that top performers in health care (self-identified as outperforming health care organizations) are focused on ramping up their analytics capabilities, with more than 90 percent of health care chief information officers (CIOs) for top-performing organizations citing insight and intelligence as a key focus for their organizations, compared to 65 percent of underperformers in the industry. Increased business intelligence and analytics was also cited as the top priority of 83 percent of health care CIOs when asked about plans to increase competitiveness.

IBM’s purchase of Truven Health Analytics is expected to close later in the year, once applicable regulatory reviews have finished. Once completed, IBM will be in possession of one of the world’s largest and most diverse collections of health-related data, which would represent an aggregate of 300 million patients worth of data. This robust aggregation of data includes information on costs, claims, quality, and outcomes, the analysis of which can create unique insights to help aid in making health care decisions.