Fact Sheets

REDUCED MEDICARE REGULATORY BURDENS ON HEALTH CARE PROVIDERS WILL SAVE OVER $5 BILLION

The Centers for Medicare & Medicaid Services (CMS) finalized two rules today to reduce unnecessary, obsolete, and/or burdensome regulations on American hospitals and health care providers.  These rules will help achieve the key goal of President Obama’s regulatory reform initiative to reduce unnecessary burdens on business and save approximately $1.1 billion across the health care system in the first year and more than $5 billion over five years.   

Two sets of regulatory reforms were placed on display today in the Federal Register that are designed to improve transparency and help providers operate more efficiently and at lower cost by reducing their regulatory burden.   One set finalizes updates to the Medicare Conditions of Participation (CoPs) for hospitals and critical access hospitals (CAHs).  The second set, the Medicare Regulatory Reform rule, addresses regulatory requirements for a broader range of health care providers and suppliers who provide care to Medicare and Medicaid beneficiaries.  

CMS estimates that annual savings to hospitals from the final rule on CoPs could exceed $900 million in its first year as hospitals use this new flexibility.  The Medicare Regulatory Reform rule could save up to $200 million in the first year and over $100 million in each year thereafter. 

Taken together, these rules will reduce hospital and other health care provider costs by more than $1.1 billion the first year. These cost savings will come directly from reduced regulatory burdens, and are not accompanied by reimbursement reductions. As such, these savings will help providers improve the quality of care they provide to Medicare and Medicaid beneficiaries and all Americans.

Background

The final rules were developed through a retrospective review of existing federal regulations called for by President Obama’s January 18, 2011 Executive Order 13563 to “modify, streamline, or repeal” regulations that impose unnecessary burdens, including those on hospitals and other providers that must comply with requirements through Medicare.

The rules take into consideration numerous burden reduction recommendations from hospitals, CAHs, members of Congress, and patient advocates, among others.  In total, CMS considered more than 1,800 comments from members of the public in finalizing these rules.

Medicare Conditions of Participation

The CoPs are federal health and safety requirements ensuring high quality care for all patients.  Hospitals and CAHs must meet these conditions to participate in Medicare and Medicaid.  The final rule is designed to reduce the regulatory burden on hospitals by:

• Requiring that all eligible candidates, including APRNs and PAs, must be reviewed by the medical staff for potential appointment to the hospital medical staff and then allowing for the granting of all the privileges, rights, and responsibilities accorded to appointed medical staff members.
• Supporting and encouraging patient-centered care, through such changes such as allowing a patient or his or her caregiver/support person to administer certain medications (both those brought from the patient’s home and those dispensed by the hospital), and by allowing hospitals to use a single, interdisciplinary care plan that supports coordination of care through nursing services.
• Encouraging the use of evidence-based pre-printed and electronic standing orders, order sets, and protocols that ensure the consistency and quality of care provided to all patients by allowing nurses the ability to implement orders that are timely and clear.
• Allowing hospitals to determine the best ways to oversee and manage outpatients by removing the unnecessary requirement for a single Director of Outpatient Services.
• Increasing flexibility for hospitals by allowing one governing body to oversee multiple hospitals in a single health system.
• Allowing CAHs to partner with other providers so they can be more efficient, and at the same time, ensure the safe and timely delivery of care to their patients. 

Medicare Regulatory Reform

The Medicare Regulatory Reform rule will identify and begin to eliminate duplicative, overlapping, outdated, and conflicting regulatory requirements for health care providers and suppliers, including hospitals, ambulatory surgical centers, end-stage renal disease facilities, durable medical equipment suppliers, and a host of other health care providers and suppliers regulated under Medicare and Medicaid.  The goal of this final rule is to both reduce regulatory burdens and help providers improve care for patients. 

By reducing unnecessary burdens on health care providers, this rule allows them to dedicate more resources to improving patient care.  Some of the more than two dozen finalized regulatory changes include:

• Eliminating obsolete regulations, including outmoded infection control instructions for Ambulatory Surgical Centers (ASCs); outdated Medicaid qualification standards for physical and occupational therapists; and duplicative requirements for governing bodies of Organ Procurement Organizations.
• Requiring only higher risk End Stage Renal Disease (ESRD) facilities to comply with the full National Fire Protection Agency Life Safety Code requirements.  CMS estimates that this burden reduction could save an estimated $108.7 million for ESRD providers.
• Eliminating the specific list of emergency equipment ASCs must have in the facility, and allowing facilities, in conjunction with medical staff and their governing bodies, to develop policies and procedures that specify emergency equipment appropriate to the services they provide.
• Replacing inflexible time-limited agreements with open-ended agreements for Medicaid-participating Intermediate Care Facilities that serve people with intellectual disabilities.  The regulation also implements a recommendation from stakeholders to replace the term “mental retardation” with “intellectual disability,” which is the same change that Congress has made to most of the federal law’s references to the term.
• Updating e-prescribing technical requirements so Medicare Prescription Drug Plans meet current standards.

For More Information

To view the final rules, please visit www.ofr.gov/inspection.aspx.

For additional information on hospital and CAH CoPs, visit http://www.cms.gov/CFCsAndCoPs/06_Hospitals.asp.