Providers are facing a variety of administrative burdens from federal regulations that are increasing healthcare costs and negatively impacting the value of health information technology.

That’s the consensus of industry experts who testified on Tuesday before a Senate health committee hearing on how to reduce administrative spending—expenses that are not directly associated with providing medical goods and services to patients.

“In the U.S., one of the most substantial administrative costs at all levels of healthcare is regulatory compliance,” Robert Book, a health economist and advisor to the American Action Forum think tank, told lawmakers.

Widespread adoption of electronic health records was supposed to reduce the duplication of tests and diagnostic procedures, Book contends. However, in his testimony, he said the administrative cost of adopting these systems has been incurred by providers yet there is no evidence of any savings.

“In particular, hospitals continue to repeat tests previously done by other providers, perhaps to validate the results, or perhaps because they get paid for doing the tests again—or perhaps both,” testified Book. “In this case, a known administrative cost was supposed to reduce actual healthcare costs, but it failed to do so.”

Also See: EHRs fall short in reducing administrative costs

Sen. Lamar Alexander (R-Tenn.), chairman of the Senate health committee, noted in the hearing that administrative costs account for 8 percent of the nation’s healthcare spending vs. only 1 percent to 3 percent in other countries.

Sen. Lamar Alexander (R-Tenn.)
Sen. Lamar Alexander (R-Tenn.)

“While many administrative tasks in the healthcare system come from outside the federal government—such as insurance company or state requirements—the federal government is clearly at fault for some of this burden,” said Alexander, who pointed to the Meaningful Use program as an example of burdensome rules involving EHR systems.

According to Alexander, the federal government has paid $38 billion in incentives to providers to get them to implement EHRs under Meaningful Use, while instituting “specific requirements for how doctors must use the systems” and penalizing them when they do not comply with the requirements. EHR systems “have ended up being something physicians too often dread, rather than a tool that’s useful,” he added.

Becky Hultberg, president and CEO of the Alaska State Hospital and Nursing Home Association, told the Senate health committee that hospitals oppose the use of Stage 3 Meaningful Use requirements in Fiscal Year 2019.

“The level of difficulty associated with meeting all of the Stage 3 current measures is overly burdensome,” said Hultberg in her testimony. “Some of the measure thresholds require the use of certified EHRs in a manner that is not supported by mature standards, technology functionality or an available infrastructure. The costs associated are significant for hospitals and health systems without demonstrable benefit, especially for smaller facilities with negative margins. Small hospitals are often forced to buy expensive upgrades totaling tens, if not hundreds of thousands of dollars, with reporting functionality they don’t need. For a hospital barely staying afloat, that is a significant expenditure.”

“Technology can be a help but right now it is sometimes a hindrance,” added Hultberg.

Matt Eyles, president and CEO of America’s Health Insurance Plans, testified that a lack of interoperability is a significant challenge to improving the quality of care and lowering costs.

“Physician reporting on quality measures is impeded by the lack of interoperability across electronic health records and the inability of some EHRs to support the retrieval of quality measurement data,” said Eyles. “To ensure that consumers have meaningful information on quality, it is important to improve the functionality of EHRs to allow quality data to be extracted and reported on a widespread basis. These efforts should be combined with steps to standardize the use of quality measures across public and private payers, and to streamline and reduce the overall number of quality measures.”

David Cutler, an economics professor at Harvard University, told lawmakers that providers spend a lot of time, effort and money pulling information from EHR systems and putting them in a format that is suitable for pay-for-performance calculations. However, he said that technologically there is no reason why EHRs cannot interface with billing systems or automatically submit information for quality assessment.

“You have an electronic medical record system and a billing system that keep separate information and the two don’t talk to each other,” Cutler pointed out. “So, as a result, you have people involved and it’s extremely costly to do that.”

Part of the problem, according to Cutler, is that providers do not want to give health insurers access to EHR systems because they are considered proprietary. He recommends that the Department of Health and Human Services—working with provider organizations—develop and implement a plan to reduce administrative costs in healthcare by 50 percent within five years through payment simplification, standardized pre-authorization policies, as well as integrating EHR and billing systems.

“The reality of the situation is this—unless the federal government leads the way, the United States will continue wasting hundreds of billions of dollars annually on unnecessary administrative expenses,” Cutler warned.

Register or login for access to this item and much more

All Health Data Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access