CMS Cuts Red Tape, Providers to Save $5B

Cheryl Clark, May 11, 2012

Health providers and payers stand to save $1.1 billion in one year and $5 billion over five years because of relaxed regulatory red tape specified in two final Medicare rules released Thursday by the Center for Medicare & Medicaid Services.

The numerous changes are designed to eliminate or reduce what Health and Human Services Secretary Kathleen Sebelius called "unnecessary, obsolete, or burdensome regulations" imposed on hospitals and other healthcare providers.

"We are cutting red tape and improving health care for all Americans," Sebelius said in a statement. "Now it will be easier for health care providers to do their jobs and deliver quality care."

A Broader View of Medical Staff
The greatest savings, about $330 million, will come from provisions that broaden the definition of a hospital's medical staff in a way that allows hospitals to grant privileges to both physicians and non-physicians even if they're not on the medical staff. Also, podiatrists who are not physicians may have a role in hospital leadership.

Some of the changes are extremely controversial. In the text of its rule, CMS acknowledged "a significant number of comments from those who were adamantly opposed," with many dissenters "expressing serious concerns about allowing non-physician practitioners to obtain hospital privileges without becoming members of the medical staff," which would "circumvent medical staff oversight" and "detrimentally impact patient safety and quality."

However, the rule says, "we do not believe that any eliminated requirement in this final rule has saved lives in recent decades."

Outpatient Services
The second greatest savings, about $300 million, comes from changes in rules governing hospital outpatient services. For example, the new rules remove the duplicative requirement that a single director of outpatient services oversee all outpatient departments.

A second rule removes requirements that an ambulatory surgery center must use outdated terminology and equipment that aren't necessary for minor procedures not requiring anesthesia.

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