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Medicare regulatory reform effort under way

August 31, 2012

The Centers for Medicare & Medicaid Services (CMS) on May 10 finalized two rules 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,” CMS officials said in a prepared statement.

The two sets of regulatory reforms, published last month in the Federal Register, are designed to improve transparency and help providers operate more efficiently and at lower cost by reducing their regulatory burden, CMS officials said.

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.

The Medicare Regulatory Reform rule will identify and begin to eliminate duplicative, overlapping, outdated, and conflicting regulatory requirements for health care providers and suppliers, including hospitals, ambulatory surgical centers, end-stage renal disease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,” CMS officials said.

Some of the more than two dozen finalized regulatory changes include:

  • Re-enrollment Bar for Providers and Suppliers. The new rules eliminated a Medicare “re-enrollment bar” for providers and suppliers who have had billing privileges revoked solely for failure to promptly respond to a CMS revalidation request or similar request for information.

Federal regulation (42 C.F.R. § 424.535), designed to protect Medicare from unscrupulous providers, allows the CMS and its payment contractors to revoke the billing privileges of health care practitioners and product suppliers who provide Medicare with inaccurate enrollment information or fail to update enrollment information in timely manner.

Since 2008, the CMS has barred all such practitioners and providers from re-enrolling in the Medicare program for one to three years after their billing privileges were revoked.

“(W)e believe that this change is appropriate because the re-enrollment bar in such circumstances often results in unnecessarily harsh consequences for the provider or supplier and causes beneficiary access issues in some cases. We have learned of numerous instances where the provider’s failure to respond to a revalidation request was unintentional; that is, the provider was not aware of the request due to, for instance, misrouted mail or a clerical mistake,” CMS officials noted in the Federal Register notice for the new rule.

Practitioners and suppliers who have billing privileges revoked for more serious reasons (for example, a felony conviction) can still be barred from re-entering the program for an appropriate period of time, the CMS emphasized.

  • Appeals of Part A and Part B Claims Determinations. The CMS has removed obsolete regulations, developed prior to the 2000 federal Benefits Improvement and Protection Act (BIPA), governing initial determinations, re-openings, and appeals of claims under original Medicare. “This will eliminate confusion by Medicare beneficiaries, providers, and suppliers regarding which appeals rights and procedures apply,” CMS officials said.
  • E-prescribing. The CMS has also retired older versions of e-prescribing transactions for Medicare Part D and adopted newer versions to be in compliance with the current e-prescribing standards.

The CMS estimates 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, (the hospital and practitioner regulatory reform) 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,” according to the CMS statement.

The final rules were developed through a retrospective review of existing federal regulations called for by President Obama’s Jan. 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, the CMS considered more than 1,800 comments from members of the public in finalizing these rules.

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

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