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AHA Report: Regulatory Burdens Cost Hospitals $39 Billion Annually

November 13, 2017

A recent American Hospital Association (AHA) report quantifies the impact of regulatory burden on our nation’s hospitals and post-acute care facilities. The report, Regulatory Overload, details the cost to providers of complying with an ever-changing array of new and existing regulations that don’t improve patient care, but increase the cost of care.

The AHA and Manatt Health analyzed 341 hospital requirements and 288 post-acute care requirements from four federal agencies across nine domains. They were able to identify that hospitals, health systems, and post-acute care providers spend almost $39 billion each year on administrative functions related to compliance with these regulations.

An average-size community hospital spends more than $7 million a year to support federal regulation compliance.

The four federal agencies responsible for 629 regulatory requirements are:

  • The Centers for Medicare & Medicaid Services (CMS)
  • The Office of Inspector General
  • The Office of Civil Rights
  • The Office of the National Coordinator for Health Information Technology

The nine domains reviewed in the report include:

  • Post-acute care
  • Meaningful use of electronic health records
  • Fraud and abuse
  • Quality reporting
  • Privacy and security
  • Conditions of participation
  • Value-based payment models
  • Program integrity
  • Billing and coverage verification requirements

According to the report, the average-size hospital dedicates 59 full-time equivalents (FTE) to regulatory compliance, with more than 25 percent of the FTEs being patient care providers, including doctors and nurses.

The report identifies the frequency and pace of regulation changes as a costly challenge when maintaining compliance.

A September blog by HAP President and CEO Andy Carter outlined Pennsylvania hospitals’ concerns with regard to “red tape” and presented a wish list for modernized and simplified administrative reporting.

In addition, HAP earlier this month reported that CMS Administrator Seema Verma announced a new national initiative to reduce the administrative burden on providers. The new initiative, Meaningful Measures, “…will involve only assessing those core issues that are the most vital to providing high-quality care and improving patient outcomes.”

HAP and its member hospitals and health systems continue to advocate for the reduction in unnecessary regulatory burden to allow for a greater focus on providing high-quality patient care and expanding a focus on population health initiatives toward keeping communities healthier.

For more information about the AHA report, contact Kate Routledge, HAP’s senior director, compliance.

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