appease the allegation that medical errors beset the healthcare industry and generate major risk to patients. As with any matter posing a potentially significant impact on a population, the government has a sizable interest. Lately, the government decided to take action toward enacting quality of care and patient protection regulation. In an optimal setting, this would appear easy to execute, but reality indicates such top-down regulatory answers to health care quality and patient safety lead to negative domino effects, including increased health care costs, unforeseen conflicts with pre-existing regulation, and decline of provider self-governance.
Regulation carries its weight in gold through its function ratio of benefits to costs. In regards to the cost side of the equation, it includes costs to the government, consumers, and regulated entities. A study conducted in 2002 to assist research in understanding the estimated comprehensive value of health care regulation found the figures led to a net cost of $169 billion as of 2002. “Of that total, the study projected quality-related governmental oversight ran an estimated $51.6 billion but only returned an estimated benefit of $30.1 billion — thereby contributing a projected $21.5 billion, or 13%, to the overall net fiscal burden of health care regulation” (Mekel, 2010, p. xx-xx ). In regards to how net cost was determined: “the questions concern compliance costs in relation to benefits obtained, transaction costs associated with regulatory administration and enforcement, and unanticipated or unwanted responses on the part of the regulated industry”(Mekel, 2010, p. xx-xx) .
Regulation in an already heavily regulated area only leads to higher costs as shown by the data represented in the study. Regulations sometimes lead to high individual adherence costs, particularly organization attempt to comply with existing regulations that conflict with new ones. This conflict often results in one preventing the other from achieving their intended benefit. So instead of better compliance with the previous and current regulations, additional regulation only leads to conflict of compliance, reduction in compliance, and higher costs.
Compliance failures are indicative of ineffective regulation as well as unnecessary cost. Health care is a field where compliance failures and regulatory inflation exist due to the “fragmented jurisdiction among federal, state, and local governments” (Ellig, 2012, p. xx-xx) . In fact, constant additions of convoluted regulations produce regulatory overburden and uneven enforcement. Lack of research on effectiveness of such regulations leads to an inability to improve the current state of certain areas in healthcare such as Medicare Home-Based Care programs.
As stated by American Association for Homecare (2011), one of the most ineffective Medicare regulations for home-based care is the controversial Medicare “competitive” bidding program. Its implementation began January 1, 2011 in 9 large metropolitan-based regions: Charlotte, Cincinnati, Cleveland, Dallas-Fort Worth, Kansas City, Miami, Orlando, Pittsburgh, and Riverside, California. An additional 91 regions were applied later that year. As the letter states: “The bidding program will affect millions of Medicare beneficiaries who require oxygen therapy, enteral nutrients (tube feeding), continuous positive air pressure (CPAP) and respiratory assistive devices, power wheelchairs, walkers, hospital beds and support surfaces, and mail-order diabetic supplies“(Teichert, 2013, p. xx-xx) . The Medicare Program led to the severe restriction of which companies could provide the equipment and services subject to bidding. Since the bidding program began everyone within the bidding sphere, clinicians, patients, etc., have had trouble acquiring providers for equipment and supplies.
The case of American Associates for Homecare v. Kathleen Sebelius, case number 1:13-cv-00922, in the U.S. District Court for the District of Columbia addresses the problems faced in the Medicare bidding program and demonstrates the difficulties such regulations put on the healthcare field. The program led the company to non-compliance as they received contracts from companies that failed to meet licensing requirements. “U.S. District Judge Beryl A. Howell denied the American Association for Homecare and Home MediService Inc.’s request for a temporary restraining order preventing U.S.Department of Health and Human Services Secretary Kathleen Sebelius from implementing the second round of the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies Competitive Bidding Program, saying the plaintiffs failed to show that they would be irreparably harmed by the program expansion” (Teichert, 2013, p. xx-xx). The case sheds light to the inability for companies to find qualified bidders and their reluctance to accept the new regulations.
Although the ruling sided against the company, along with previous attempts of having the program stalled, the program faces increased opposition from government officials. Recently, lawmakers have put in a request for an HHS inspector general investigation.. Critics of the bidding program state the limitation of which companies are allowed to provide products and services gives CMS the power to arbitrarily choose low prices decreasing the chances winning bidders can/will supply the products and services. As Pittman (2013) states several efforts were made to halt or stall the program: “Previous lobbying efforts by the device industry stalled the program. Round one was to start in 2008, but Congress halted it after only 2 weeks. Rep. Tom Price, MD, (R-Ga.) has sponsored a bipartisan bill (H.R. 1717) with 150 co-signers that would halt Round two” (Pittman, 2013, p. xx-xx).
So where does the source of ineffective Medicare policies originate from? Over the past twenty-five years the MA program pursued expansion of Medicare beneficiaries’ choices including private plans and attempts to save Medicare money. Though they have tried to formulate policies that would help achieve their goals, the policies have resulted in failures, an example being the 2003 Medicare Modernization Act. The Medicare Modernization Act (MMA) enabled MA plans to get generously paid, resulting in: “expanded choice and enrollment (achieving the first goal), but costing Medicare more money than TM, an estimated $14 billion more in 2009 (and thus failing on the second goal)” (McGuire, Newhouse, & Sinaiko, 2010, p. xx-xx) .
The first in a series of failed policies began in 1972 where Congress first authorized capitation payments for services covered under Parts A and B. Although Congress enacted this policy, no action was taken until 1976. And that was only because Medicare initiated field demonstration projects that contracted with HMOs to provide care for Medicare beneficiaries in exchange for prospective payments. “In the 1970s and early 1980s these demonstration HMOs provided some of the first evidence of managed care’s potential savings by reducing the number of Medicare beneficiaries’ inpatient hospitalizations by 8% over two years.” (McGuire, Newhouse, & Sinaiko, 2010, p. xx-xx) . In 1985, after successful runs of demonstration projects, private plans that took risk-based capitation payments shifted from demonstration status to regular status within the Medicare program.
To conclude there are many regulatory concerns related to health care. Several laws and policies have been enacted that not only causes turmoil within the healthcare industry, but also to non-compliance and over regulation. As it pertains specifically to the Medicare bidding program, more and more opponents emerge due to the increasing decline rate of companies during product and supply bids. Over the past quarter century, various modifications in program rules, plan payments, and other incentives have not only affected participation in the Medicare program but also compliance. More research is needed on ways to improve policy creation.
Ellig, J. (2012, March 27). Healthcare Law Highlights Problems With Regulatory Process – Economic Intelligence (usnews.com). Retrieved from http://www.usnews.com/opinion/blogs/economic-intelligence/2012/03/27/healthcare-law-highlights-problems-with-regulatory-process
McGuire, T., Newhouse, J., & Sinaiko, A. (2010). An Economic History of Medicare Part C.Milbank Q, 89(2), 289-332.
Mekel, M. (2010). Emerging Issues in Health Care Regulation: Protecting Patients or Punishing Providers? Journal of Legal Medicine. doi:10.1080/01947641003598138
Pittman, D. (2013, August 26). Medicare’s DME Bidding Program Criticized. Retrieved from http://www.medpagetoday.com/PublicHealthPolicy/Medicare/41184
Teichert, E. (2013). Judge Won’t Postpone Medicare Competitive Bid Expansion – Law360. Retrieved from http://www.law360.com/articles/453920/judge-won-t-postpone-medicare-competitive-bid-expansion
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