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February 7, 2013

Providers to realize savings from CMS proposal to eliminate obsolete and redundant regulations

By Jay Nawrocki, MA

A CMS proposal to remove or rework the conditions of participation (COPs) for a number of providers by removing redundant or obsolete regulations is projected to save between $231 million and $676 million per year, according to CMS estimates (Proposed rule, 78 FR 9216, February 7, 2103). Hospitals are likely to realize the most savings by allowing registered dieticians to order therapeutic diets. The majority of the savings from this change will result from less use of parenteral nutrition (PN). Critical access hospitals (CAHs), rural health centers (RHCs) and Federally Qualified Health Centers (FQHCs) are expected to save $42 million annually from reduced travel costs from no longer requiring physicians to be onsite once every two weeks. CMS estimates that only a small percentage of long term care facilities, which are primarily those that are replacing an existing facility instead of remodeling an existing facility, will need to seek a delay in the installation of sprinkler systems resulting in only $22 million of savings.

Hospitals. CMS has determined that the largest savings from the removal of redundant and obsolete regulations will be realized by hospitals that allow registered dieticians (RD) to order therapeutic diets as opposed to having the practitioner responsible for the care of the patient order the diet. A study at an academic medical center found that allowing RDs to order diets reduced the amount of PN usage, resulting in significant savings, on average $169,000 per hospital per year.

Additional savings would result from hospitals not having to treat patients who would experience complications from PN usage. This change in care would result in fewer incidents of readmissions and decreased lengths of stays for patients resulting in less expenditure by the hospital.

CMS had difficulty estimating how many of the 4,900 certified Medicare and Medicaid hospitals would take advantage of allowing RDs to order diets. CMS thinks that as few as 15 percent to as many as 95 percent of hospitals will take advantage of this change. This variation provides for a wide range of estimated savings, from $83.3 million to $528 million, depending on how many hospitals allow RD to prescribe diets.

CMS also estimates that hospitals will save an additional $38.8 million from not having to have physicians provide direct supervision of the preparation of radiopharmaceuticals. Based on figures supplied by the Society of Nuclear Medicine and Molecular Imaging, an estimated 1.6 million radiopharmaceuticals are prepared when physicians who could directly supervise the preparation would not normally be in the hospital. Hospitals would realize these savings by not having to pay a physician to be present for this purpose between the hours of 7:00 PM and 7:00 AM.

Rural health providers. CMS estimates that about 15 percent or 200 of the 1,330 CAHs will realize a savings from not having to pay a physician to be on-site at least once every two weeks to provide medical care as well as medical direction, and supervision. The majority of CAHs have a physician present on a regular basis and would not be affected by this change resulting in an estimated $1.6 million in savings. For RHCs the savings estimated by CMS would be $18.1 million and $23.4 million for FQHCs. CMS believes that all 3,977 RHCs, and 5,134 FQHCs, would benefit from the removal of this requirement. Savings are realized through less travel expenses and administrative costs associated with physicians not having to travel to meet the bi-weekly requirement. The additional cost of telecommunication equipment and software that some providers would install in order to communicate more effectively with a distant physician is included in this estimate of savings.

Long term care facilities. Long term care facilities that apply for an extension of the deadline to have sprinklers installed in their facilities may realize $22 million in savings. The majority of this amount comes from not having to install sprinkler systems in older facilities that will be replaced in the next two years by a newer facility. CMS estimates that the great majority of the 15,800 nursing homes have installed the sprinkler system and only 125 facilities will need an extension of the deadline; 50 of which are replacing their facility and 75 that have not completed the installation in the existing facility.

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