The proposed rule would make a relatively small dent in the $39 billion annual nonclinical regulatory burden—as estimated by an industry report—on hospitals and post-acute care providers.


Sept. 17—A large portion of the $1.1 billion in ongoing annual regulatory relief proposed this week for providers would come from lower costs for hospital outpatient departments.

By far the largest amount of regulatory savings in the proposed rule was an estimated $454 million annually from the lifting of the requirement that every patient treated at a hospital outpatient department or ambulatory surgery center receive a medical history and physical.

“Every hour saved from reducing needless administrative burden is an hour more that our healthcare system can spend improving Americans’ health outcomes, and every needless requirement we eliminate saves patients and taxpayers money,” Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS), said Sept. 17 during an address in Washington, D.C.

The proposed changes came as part of the Trump administration’s Patients Over Paperwork initiative, which CMS projected will eliminate more than 53 million hours of burden for providers and save nearly $5.2 billion between 2018 and 2021.

Total annual provider savings from other changes in the proposed rule include:

  • $105 million from hospital infection control changes
  • $86 million from changes to swing-bed requirements for critical access hospitals (CAHs)
  • $94 million from changes to the requirement that emergency preparedness be assessed annually by healthcare facilities

Under current rules, the medical history and physical examination requirements must be met no more than 30 days before surgery (or 24 hours after admission) or a procedure requiring anesthesia services—except in emergencies.

Instead, CMS proposes to require that an assessment be performed when the patient is receiving specific outpatient surgical or procedural services. Otherwise, the medical staff could develop and maintain a policy that identifies specific patients as requiring a comprehensive medical history and physical examination.

Verma described the change as “streamlining hospital outpatient and ambulatory surgical center requirements so that doctors can determine what information is necessary for each patient.”

The proposed change followed research that found a lack of clinical benefit from some such requirements. For instance, CMS cited a 2000 study in the New England Journal of Medicine concluded that routine preoperative medical testing—such as blood counts, clotting studies, chemistry panels, electrocardiograms, and chest x-rays—“does not measurably increase the safety of the surgery.”

Hospital Impact

Asked which changes were most sought by hospitals, CMS officials highlighted the proposals allowing multihospital systems to have a unified and integrated Quality Assessment and Performance Improvement program and unified infection control programs for their member hospitals.

“Having a comprehensive, systematic program may in fact be better and would certainly be less burdensome,” a senior CMS official told reporters. “So that was just one example of the requests” from hospital advocates.  

Another change that would impact hospitals is a proposal to allow discretion on when an autopsy is indicated in certain instances.

“CMS believes it is appropriate to defer to State requirements in this area and that this change will allow facilities to make better use of limited resources,” a fact sheet stated.

Another hospital-focused change would remove cross-references to requirements for long-term care facilities when the requirements do not apply because of the short amount of time that patients are in swing-beds.

For CAHs, the proposed rule would cut the frequency—from annual to biennial—with which they are required to perform a review of their policies and procedures. The change aims to allow facilities to better utilize their limited resources, CMS officials said.

CMS also proposed to end a duplicative requirement for CAHs to disclose the names of people with a financial interest in the facility as part of the conditions of participation (CoP) process. Such information also is collected outside of that process.

Hospital Reaction

Although the proposed rule would make a relatively small dent in the $39 billion annual nonclinical regulatory burden—as estimated by an industry report—on hospitals and post-acute care providers, it drew a positive response from Rick Pollack, president and CEO of the American Hospital Association (AHA). He spoke at MedStar Washington Hospital Center as part of the same event at which Verma spoke.

“The simple truth is the regulatory burden hospitals face is substantial and unsustainable, and can be overwhelming," Pollack said. "CMS's commitment to reduce the regulatory burden is crucially needed as we strive to meet the increasingly complex needs of our patients and accelerate efforts to reduce costs.”

But the proposed regulatory tweaks did not address many of the changes sought in recent years by AHA and other hospital advocates. For instance, in a September 2017 letter to CMS on regulatory relief, AHA urged that the agency cancel Stage 3 of the meaningful use program for electronic health records, postpone and reevaluate post-acute care quality measurement requirements, and permanently prohibit enforcement of direct-supervision requirements.

CMS has a mixed record with some other hospital regulatory priorities. The agency fulfilled a request by the Federation of American Hospitals (FAH) that it end the 25 Percent Rule for long-term care hospitals, which the federation said is no longer necessary in light of the new two-tiered payment system. CMS agreed to end the rule as part of the final rule for the Inpatient Prospective Payment System issued in August.

In contrast, CMS is increasingly moving in the opposite direction of an FAH request that it halt mandatory payment models from the Center for Medicare & Medicaid Innovation.

“Requiring participation can be necessary to determine whether a model really works, but it may also be necessary to meet what we see as an urgent need for reform,” Alex Azar, secretary of the U.S. Department of Health and Human Services, said at a Sept. 6 event.

Hospitals in Medicare’s first mandatory bundled payment model succeeded in cutting Medicare gross spending in the program’s first year, according to a new analysis.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, September 18, 2018