Reducing Regulatory Burdens in Health Care, Saving More Than $1 Billion

On January 18, President Obama called for an unprecedented and ambitious government-wide “lookback” at federal regulations. The lookback requires all agencies to reexamine their significant rules and to streamline, reduce, improve, or eliminate them. 

A few months ago, and after consulting with the public, over two dozen departments and agencies released plans to remove what the President has called “absurd and unnecessary paperwork requirements that waste time and money.” And we’re continuing our work to identify and eliminate regulations that don’t make sense.

Just a small fraction of our burden-reducing reforms promise billions of dollars in savings over the next five years. And many of these changes overlap with the recent recommendations of the President’s Council on Jobs and Competitiveness.

Today, one part of this larger effort is moving forward. The Department of Health and Human Services is announcing three sets of important reforms that are expected to save more than $1 billion every year in health care overhead and paperwork costs. These reforms are aimedat reducing unnecessary, obsolete, or burdensome regulations on American hospitals and healthcare providers.  

While some of the reforms are a bit technical, they are going to save doctors, nurses, and patients a lot of time and money:

1. Streamlining Conditions of Participation. “Conditions of Participation” are federal health and safety requirements that hospitals must meet in order to participate in the Medicare and Medicaid programs.  CMS estimates that today’s burden-reducing initiative will produce $940 million in annual savings to hospitals by giving hospitals more flexibility in deciding how to best treat their patients. Without compromising safety, these new rules will increase the time and resources hospitals and providers can devote to patient care by eliminating outdated, bureaucratic, and unnecessary requirements.
2. Reducing burdens on end-stage renal disease facilities and ambulatory surgical centers. The proposed Medicare Regulatory Reform rule would identify and eliminate duplicative, overlapping, outdated, and conflicting regulatory requirements for healthcare providers and suppliers, including end-stage renal disease facilities and ambulatory surgical centers.  CMS estimates that first year savings will total $170 million and that another $37 million per year will be saved thereafter through the elimination of outdated standards and by ending requirements that these centers purchase and maintain unnecessary equipment.
3. Simplifying conditions for coverage for Ambulatory Surgical Centers. HHS is finalizing a rule to update the conditions for coverage regulations for Ambulatory Surgical Centers (ASCs). Specifically, the final rule eliminates a provision that required ASCs to notify patients, the patients’ representative, or the patients’ surrogate of their rights on a separate day from their procedure. Before today’s final rule, regulatory requirements led to significant problems and inconveniences for patients who needed ASC services on the same day that they received a physician referral. CMS estimates that the final rule will result in $50 million in annual savings for ASCs.

Today’s announcements are just one step in a continuing process of regulatory reform. In the recent past, other significant cost-saving initiatives have been announced by the Departments of Commerce, Health and Human Services, Homeland Security, Labor, State, and Transportation, as well as the Environmental Protection Agency. 

Our new initiatives, coming from more than two dozen agencies, are designed to change the regulatory culture of Washington by constantly exploring what is working and what isn’t. Agencies are continuing to review their rules – to make sure that the lookback is not just a one-time event. New ideas are welcome. We are reaching out to hospitals, nurses, physicians, consumers, and patients to hear their ideas about how we can make our health care system stronger and eliminate outdated and unnecessary regulations. You can click here for information on where to send us your thoughts and comments on today’s proposals.

Cass Sunstein is the Administrator of the Office of Information and Regulatory Affairs