Cutting the Red Tape: Reactions to the New HHS Rules

By Debra Wood, RN, contributor

May 22, 2012 - The U.S. Department of Health and Human Services has reduced some of the unnecessary, obsolete or burdensome regulations for American hospitals and healthcare providers. But is it enough?

“They are positive steps in the right direction, but we shouldn’t come to think that the work is done,” said Jim Parker, president of Health Market Strategies of Indianapolis. “There is plenty to do.”

HHS Secretary Kathleen Sebelius estimates the changes to Centers for Medicare and Medicaid Services (CMS) regulations, which were issued on May 10, 2012, will save nearly $1.1 billion across the healthcare system in the first year and more than $5 billion over five years.

HHS Rules
Kevin Eldridge is skeptical the CMS changes will save as much money as the government expects.

Kevin Eldridge, an attorney with Quarles & Brady in Madison, Wis., said he is “skeptical that the changes to the CMS hospital and critical access hospital Conditions of Participation will save the $4.7 billion.”

However, he acknowledges that they will save administrative time, for example, with the change that hospitals receive “prompt” authentication of verbal orders, which replaces a rule that required providers to authenticate verbal orders within 48 hours.

“On the other hand, many of CMS’s changes consist of eliminating outdated standards and catching the Conditions of Participation up to current practice,” Eldridge added, giving the example that many midlevel practitioners already are able to obtain clinical privileges, one of the changes outlined in the new rules.

“The CMS changes may actually end up costing hospitals money,” Eldridge said. “CMS will now require hospital governing bodies to include a medical staff member, which was not previously required by the Conditions of Participation and may require changes to many hospitals’ bylaws.”

The government maintains hospitals will save $940 million annually with changes in the Medicare Conditions of Participation and $200 million with the Medicare Regulatory Reform rule, which eliminates duplicative, overlapping and outdated regulatory requirements for healthcare providers.

Among the changes from CMS: allowing one governing body oversight of multiple hospitals within a single health system and letting critical access hospitals partner with other providers. The rule also eliminates obsolete regulations, such as outmoded infection control instructions for ambulatory surgical centers; outdated Medicaid qualification standards for physical and occupational therapists; and duplicative requirements for governing bodies of organ procurement organizations.

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Andrea Englund, MSN, RN, COS-C, said the HHS changes will offer hospitals more flexibility but that could affect quality.

“The aspects of this new regulation that will be most beneficial to hospitals and providers is that it will lessen some of the overly restrictive measures, allowing organizations with more flexibility around policy and procedures to make the determination about what makes the most sense in relation to the services they provide,” said Andrea Englund, MSN, RN, COS-C, a senior consultant with the healthcare management consulting firm Beacon Partners in Weymouth, Mass.

However, she also raised the issue that leeway may affect quality.

“The more concerning aspect is that the new regulation may impose too much flexibility that would allow organizations to inadvertently make cuts that could negatively impact their ability to provide safe patient care,” Englund added.

Rich Umbdenstock, president and CEO of the American Hospital Association, in a written statement called the changes some “much-needed regulatory relief for an overburdened healthcare system.” But he added that they miss some important opportunities to further modernize the rules to better reflect how care is organized and delivered today.

Parker said there is still a lot that could be done in regulating Medicare and Medicare, particularly in how the country pays for healthcare. Accountable care organizations and patient-centered medical homes are good starts, but more is needed, Parker said.

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Jim Parker called the HHS changes a step in the right direction but added that more innovation is needed.

True innovation does not exist within the current system, he said. Innovation requires nurturing to take root and produce fruit, with outsized rewards attached to risk of failure. CMS innovation grants have allowed people to try out ideas that would not have been reimbursed under the current system, but the ideas are not entirely new.

“They were more along the lines of meaningful initiatives that do not fit into the Medicare/Medicaid reimbursement model,” Parker said. Yet health systems must be mindful of that since, “for many health systems, [CMS] is now the largest slice of revenue coming into the organization.”

Thomas W. Loker, chief operating officer of Ramsell Holding Corp., in Danville, Calif., took a more strident view, saying what is needed is a complete revamp of the American healthcare supply chain.

“Trying to fix a history of fundamental alterations for the preservation of practice of all providers, sponsors and facilitators over the past 200 years has created a disintegrated practice, flawed economic structure and mythical expectations,” Loker said. “These regulations will accomplish nothing and further break the system.”