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Senate HELP Committee Holds Hearing on Administrative Health Care Spending

August 3, 2018

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PRESS CONTACTS
Len Marquez, Senior Director, Government Relations

The Senate Health, Education, Labor, and Pensions (HELP) Committee July 31 held a hearing titled, “Reducing Health Care Costs: Decreasing Administrative Spending.” It is one in a series of hearings examining health care costs and follows a July 20 hearing on eliminating excess health care spending while improving value and quality [see Washington Highlights, July 20].

Witnesses included Becky Hultberg, president and chief executive officer, Alaska State Hospital and Nursing Home Association; Matt Eyles, president and chief executive officer, America’s Health Insurance Plans; David M. Cutler, PhD, Harvard College professor, Otto Eckstein Professor of Applied Economics, Harvard University; and Robert A. Book, PhD, advisor, American Action Forum.

Committee Chair Lamar Alexander (R-Tenn.) noted the administrative burden the federal government has imposed on providers and hospitals, stating, “The average community hospital needs 23 full-time employees just to keep up with the regulations about what a hospital needs to do to participate in Medicare ... When the federal government adds just one more question or one more rule, it may not seem like it makes much of a difference. But added together … those questions and rules add up to more time spent on paperwork, less time actually treating patients, and an increase to the cost of health care.”

In her opening statement, Ranking Member Patty Murray (D-Wash.) took the opportunity to address several partisan issues that she contends currently affect health care. She said, “[President Trump] dramatically cut investments to help people understand their health care options and get covered. He pushed a partisan tax cut bill that meant lower rates for massive insurers and drug companies and higher premiums for families. He handed the reins back to insurance companies by looking for ways to make it easier to sell junk insurance that dodges patient protections like those for people with pre-existing conditions, women, and seniors. He abandoned patients in the court of law by having his Justice Department take the highly unusual step of refusing to defend pre-existing condition protections in court. And now many of us are concerned President Trump has nominated a Supreme Court Justice who will strike down health care for millions of Americans.”

Witnesses at the hearing focused on the cost of federal regulation and its impact on administrative costs. In her opening, Hultberg stated, “Close to 24,000 pages of hospital and post-acute care federal regulations were published in 2016 alone … Hospitals, health systems, and post-acute care providers must comply with 629 discrete regulatory requirements across nine domains, spending $39 billion annually in administrative activities related to regulatory compliance. For an average-sized community hospital (around 160 beds), this equates to spending more than $7.5 million annually on regulatory compliance, with 59 staff dedicated to this purpose. Larger hospitals spend as much as $19 million on compliance activities. The average community hospital spends over $750,000 annually just on the information technology investments required for compliance. To put these numbers into the context of patient care, the regulatory burden costs $1,200 every time a patient is admitted to a hospital.”

The committee is expected to hold additional hearings examining health care costs throughout the month of August and into the fall.

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