Re: Request for Comments of the Draft Report to Congress on the Costs and Benefits of Federal Regulations and Public Nominations of Regulatory Reforms

Liberty Place, Suite 700
325 Seventh Street, NW
Washington, DC 20004-2802
(202) 638-1100 Phone

Tuesday, May 28th 2002

John D. Graham, Ph.D.
Office of Information and Regulatory Affairs
Office of Management and Budget
NEOB, Room 10235
725 17th Street, N.W.
Washington, DC 20503
Via email to

Dear Administrator Graham:

On behalf of our nearly 5,000 hospital, health care system, network and other provider members, the American Hospital Association (AHA) welcomes the opportunity to provide nominations for reducing the regulatory burden imposed on caregivers by Medicare regulations that may inhibit the delivery of high quality, timely and efficient health care.

Caregivers are frustrated when administrative burdens, driven by complex rules and regulations, shift the focus from patient care to paperwork. Last year, the AHA commissioned PricewaterhouseCoopers to survey hospitals about their paperwork experience. The study, which examined a typical episode of care for a Medicare patient suffering from a broken hip, found that physicians, nurses and other hospital staff spend, on average, at least 30 minutes on paperwork for every hour of patient care provided to a typical Medicare patient. Results also showed that in the emergency department, every hour of patient care generates an hour of paperwork. At a time when hospitals face serious workforce shortages, many caregivers cite regulatory burden as a significant negative aspect of their jobs and a major cause of overtime.

We commend you for your outstanding leadership in the Office of Information and Regulatory Affairs (OIRA) and the proactive approach you have taken to reshape how the federal government regulates business and implements legislation enacted by Congress. Your office's increased scrutiny of proposed regulations and your innovative "prompt letters" to help agencies prioritize the regulatory items on their agendas demonstrates a true "common sense" approach toward regulation.

We would like to take this opportunity to thank you and your staff for your activities and regulatory review of proposals from the Department of Health and Human Services (HHS). Your staff's close scrutiny of several major paperwork requirements currently under review has encouraged the Centers for Medicare and Medicaid Services (CMS) to closely examine how their proposals place undue burdens on providers and Medicare patients. This work has exposed some systemic problems now being appropriately addressed for the first time in many years.

The AHA has proposed an agenda to address the daily regulatory burdens that hospitals face as they strive to serve their communities' health care needs. These key priorities for regulatory reform are included in Attachment A of this letter. This agenda was submitted earlier this year to HHS Secretary Tommy Thompson and his Advisory Committee on Regulatory Relief. We ask that you, too, consider all 11 points of this agenda as priorities for regulatory reform by this Administration.

We also have urged HHS to consider adopting rulemaking or guidance under the authority granted to it by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to facilitate the prompt and accurate payment of claims. Hospitals' support for administrative simplification under HIPAA was founded on the premise that greater standardization and uniformity of administrative processes will lead to efficiencies and improvements in the timeliness of claims processing and payment, and thus fulfill Congress' objective in enacting HIPAA - reducing the administrative costs of health care.

One of the major administrative costs facing hospitals, and one of their greatest sources of frustration, is frequent delays in the processing and payment of claims. Although Medicare regulations and many state laws have been implemented to try to ensure the prompt payment of claims, these prompt pay rules are often violated or otherwise ignored, particularly by private payers. Hospitals' confidence in, and continued support for, administrative simplification is being eroded by agency statements indicating that providers should not expect to see faster or smoother claims processing and payment as a result of HIPAA standardization.

The HIPAA final regulation on electronic formats and code sets establishes national standards for electronic submission of claims. The regulation clearly states that health plans are not permitted to require additional data elements nor standard data elements in a format different from that specified in the standards. Health plans also may not refuse to accept standard transactions. It seems clear then that a HIPAA-compliant claim is a properly completed claim that is ready for processing and adjudication by a health plan.

We urge that OIRA issue a "prompt letter" to HHS promoting the realization of administrative simplification through the HIPAA regulations and specifically clarify that health plans must accept a HIPAA-compliant claim as a "clean claim" for purposes of contractual provisions with other covered entities under HIPAA, and for state and federal prompt pay requirements. The guidance in Attachment B more clearly explains the role of the trading partner agreement in ensuring that hospitals' adoption of the HIPAA standard formats and code sets ensures acceptance and prompt processing and payment of these standardized claims by all payers. This type of guidance is necessary to address some of the ambiguities in the HIPAA regulation on electronic formats and codes sets. Currently, health plans can be somewhat arbitrary with respect to the processing of a claim, leaving providers facing payment delays and engaging in wasteful re-submissions and reconciliation.

Thank you for the opportunity to share with you some of the regulatory difficulties hospitals face and our suggested solutions. We look forward to working with the Office of Information and Regulatory Affairs and the Department of Health and Human Services to make the Medicare program more workable for patients and providers. Please contact Mary Beth Savary Taylor, vice president, federal relations, at (202) 626-2270 if you have questions or would like further information.


Rick Pollack
Executive Vice President



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