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More hospitals says they are burdened by regulatory overload, says AHA

Hospitals and other providers spend nearly $39 billion a year solely on administrative activities associated with regulatory compliance, AHA says.

Jeff Lagasse, Associate Editor

Federal regulation is largely intended to ensure that healthcare providers are delivering safe, high-quality care, and indeed, some regulation is necessary. In recent years, though, clinical staff -- including doctors, nurses and caregivers -- have been devoting more time to regulatory compliance. Some of these rules don't improve care, and all of them raise costs, according to new research published by the American Hospital Association.

In fact, the findings showed that health systems, hospitals and post-acute care providers face 629 discrete regulatory requirements, including 341 hospital-related requirements and 288 PAC related requirements.

[Also: AHA tells Seema Verma to decrease regulatory burden in redesigning CMMI]

The Centers for Medicare and Medicaid Services, the Office of Inspector General, the Office for Civil Rights and the Office of the National Coordinator for Health Information Technology were the primary drivers of those federal regulations.

Financially, the wealth of regulatory requirements are a drag, the report showed. Hospitals and other providers spend nearly $39 billion a year solely on the administrative activities associated with regulatory compliance. An average, 161-bed community hospital spends close to $7.6 million annually on those administrative activities, and for those with PAC beds the number swells to about $9 million. Looked at another way, regulatory compliance costs about $1,200 every time a patient is admitted to the hospital.

[Also: Meaningful Measures show just how committed CMS, ONC are to cutting regulatory burdens]

Compliance can also pull clinical staff away from patients. The research showed that physicians, nurses and other health staff make up more than a quarter of the full-time equivalent (FTE) positions dedicated to regulatory compliance, with the average community hospital assigning 59 FTEs to the task. PAC regulations require an additional 8.1 FTEs, on average.

Also among the AHA's findings are that regulatory compliance has required extensive investment in health IT systems and process redesign. The average hospital spends about $760,000 annually to meet meaningful use administrative requirements, for example. They also invested $411,000 in related upgrades to systems during the year, almost three times larger than the IT investments made in any other area.

And then there's quality reporting: A typical hospital devotes 4.6 FTEs and spends $709,000 annually on the administrative aspects of quality reporting -- which is beset by duplicative reporting requirements that call for manual data extraction. That creates inefficiencies and consumes financial resources and clinical staff time.

Generally, there are opportunities to reduce the burden, the AHA found. For one, regulatory requirements should be better aligned and consistently applied across federal agencies, and subject to routine review for effectiveness. Federal agencies should accelerate the transition to automation of administrative transactions, such as prior authorization, the authors said; and meaningful use requirements should be streamlined and should increasingly focus on interoperability.

The AHA also identified specific activities Congress and the Administration could take to ease matters, including suspending the hospital star ratings from the Hospital Compare website; canceling Stage 3 of meaningful use of electronic medical records; suspending all regulatory requirements that mandate submission of electronic clinical quality measures; rescinding the long-term care hospital 25 percent rule, instead relying on the site neutral payment policy; and modifying Medicare conditions of participation to allow hospitals to recommend PACs.

The AHA also suggested expanding Medicare coverage of telehealth by removing restrictions on the types of technologies covered and the types of services reimbursed; and providing more regulatory flexibility in payment reform models.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com

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