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.

Experts weigh in on LTC requirements for patient care, provider compliance

On October 4, 2016, CMS issue a Final rule making extensive changes to long term care facilities (LTCFs) requirements of participation (ROP) with the goal of aligning LTCF requirements with current clinical practice standards to improve resident safety and the quality and effectiveness of the care and services delivered to residents. Kris D’Ann Maples, in-house counsel at Hillcrest Health Services and Lyn Bentley, MSW, Vice President, Quality and Regulatory Affairs, American Health Care Association (AHCA), addressed significant provisions of the new rules that will impact health care providers at the 2017 Health Care Compliance Association Compliance Institute on March 26, 2017.

The Final rule

The new requirements (81 FR 68688, October 4, 2016) represent the first significant revision of LTCF requirements for Medicare and Medicaid since 1991. The revised requirements are aimed at reducing unnecessary hospitalizations and health care acquired infections, improving behavioral health care, safeguarding LTCFs residents from the use of unnecessary psychotropic drugs, enhancing care planning, and improving quality assurance and performance improvement. In addition to the changes to the requirements, CMS is developing a new survey process that will go into effect November 2017. The new survey process incorporates the new requirements and merges with the quality indicator system. The LTC rules take effect in three phases. Phase 1 took effect November 28, 2016, Phase 2 will take effect November 28, 2017, and Phase 3 is scheduled for November 28, 2018.

Maples told attendees to be on the alert to changes in the regulations prior to implementation dates based on the current administration’s plan to abolish the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Section 6102(b) of the ACA amended Social Security Act Sec. 1128I, and mandated the operating organization have a compliance and ethics program in place. Such programs must be effective in preventing and detecting criminal, civil, and administrative violations under the Social Security Act and promoting quality of care consistent with the regulations promulgated by the HHS Secretary working with the HHS Office of Inspector General (OIG).

Themes of the rule

Bentley noted that the Final rule reflects the dramatic cultural and technology changes over three decades. She recommended providers closely read the new definitions CMS included in the Final rule, emphasizing that CMS has changed the definition of a number of terms. Among the themes identified by Bentley are patient centered-care, facility based-responsibility, quality of care and quality of life, and the changing patient population, which includes patients with behavioral health issues. Regarding facility-based responsibilities, Bentley pointed out that LTCFs must know the center, patients and staff, which requires a competency-based approach.

Residents’ rights

Bentley added that the new rule that requires LTCFs to establish a grievance policy, notify residents how and where to file a grievance, and identify a grievance officer who would be responsible for grievance process. Among the grievance officer’s responsibilities are receiving and tracking grievances, leading investigations, maintaining confidentiality, meeting documentation requirements, and issuing decisions to the resident. In addition, the grievance officer must coordinate with state and federal agencies and meet state and federal laws and regulations (42 C.F.R. Sec. 483.10(j)). The regulation also includes additional notification requirements.

Significant is use of the word “willful” in the definition of abuse as it relates to the regulation addressing freedom from abuse, neglect, and exploitation (42 C.F.R. Sec. 483.12). Bentley specifically pointed out that “willful” in the definition means that “the individual acted deliberately, not that the individual intended to inflict injury or harm.” According to the Bentley, the term “willful” as used in the definition could raise serious questions about behavior that would not be considered abuse. For example, if a nurse is bathing a patient in one bed and she sees the patient in nearby bed about to fall, while preventing the patient about to fall from falling, the other patient might try to get out of bed and fall. In this case, the nurse’s actions were deliberate and there was no intention to inflict injury or harm to the patient that she was bathing.

Compliance and Ethics rules

New regulations (42 C.F.R. Sec. 483.85) require the operating organization for each LTCF to have a compliance and ethics program that meets certain requirements in the rule by November 28, 2017 (Phase 2), and the other requirements implemented by November 28, 2019 (Phase 3). Maples explained that the Final rule codifies the OIG compliance program guidance from 2000 and 2008 and that compliance will be part of the survey process going forward.

Maples identified the minimum components of a compliance program, which must be in place by November 28, 2017. These components include:

1. written compliance and ethics standards; policies and procedures that reduce the prospect of criminal, civil, and administrative violations under the law and promote quality of care;
2. corrective/disciplinary standards that outline consequences of committing violations, are enforced consistently, and provide consequences for failure to detect or report a violation;
3. the designation of a “high level” individual” in the organization who oversees compliance and ethics program;
4. sufficient resources and authority given the designated high level individual to reasonably assure program standards are met;
5. effectively communicate standards policies and procedures, including mandatory training; and
6. taking reasonable steps after a violation.

According to Maples, by the Phase 3 effective date, LTCFs must have had an annual review of the program to make any changes to reflect changes in applicable laws and regulations and improve performance promoting quality of care and deterring False Claims Act violations. LTCFs that have five or more facilities must conduct annual compliance training for all staff member, designate a compliance officer whose major responsibility in operating the compliance program requires the individual to report directly to the organizations governing body and cannot report to the general counsel, chief operating officer, or chief operating officer.