Inpatient Psych Facilities Spend $1.7B on Medicare Compliance

March 25, 2019 - Inpatient psychiatric facilities are spending a significant proportion of their average revenue on compliance with basic conditions of participation for Medicare, according to a new report from the National Association of Behavioral Healthcare (NABH).

Inpatient treatment centers spend a total of $1.7 billion each year on Medicare compliance, which equates to 4.8 percent of the average facility’s annual revenue, including all revenue from services covered by commercial insurance.

The high cost of participation, as well as inconsistent application of regulations in the real-world environment, make it challenging for psychiatric facilities to stay compliant with Medicare.

The administrative burdens associated with participation may even prompt some providers to stop accepting Medicare all together, making access to behavioral healthcare even more challenging for the nation’s aging population.

“Inpatient psychiatric facilities operate under a heavy burden of federal regulatory requirements,” explains NABH. 

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Three major categories of requirements that pose the most problems for facilities, the organization said.

A list of regulations known as “B-tag” requirements are among the most problematic, asserted the report.  B-tag regulations include detailed protocols for patient evaluations, medical records, and staffing levels. 

However, many requirements have not been updated in decades, resulting in outdated and confusing workflows for providers and administrators.

“As enforced today, the B-tags produce frequent citations and impose large costs on providers, mostly through low-value documentation requirements,” said NABH. “Among our respondents, almost 80 percent of freestanding psychiatric hospitals report at least one B-tag citation in their most recent three compliance surveys.”

The association estimates that B-tag compliance costs inpatient psychiatric facilities $622 million annually, largely due to on-the-ground interpretation of these rules by Medicare surveyors.

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Surveyors may demand specific approaches to meeting compliance guidelines without assessing whether an existing strategy still meets the federal program requirements, the report explained.  This produces an environment in which success is more or less arbitrary, and providers may spend millions of dollars revamping an adequate program simply to meet the criteria of an individual assessor.

Psychiatric facilities are also taking issue with Medicare’s requirement to address ligature risks, or physical structures within the facility that could be used for self-strangulation.

“Psychiatric providers care deeply about keeping patients safe, which includes protecting patients from self-harm or suicidal behaviors,” said the brief. “As CMS has recognized, however, providers cannot feasibly create ‘ligature-free’ environments that are completely devoid of potential ligature attachment points.”

“Nonetheless, some surveyors demand major changes to psychiatric facilities’ infrastructure or staffing to address perceived issues that carry only minimal risk for patients in that setting.”

Sixty percent of NABH members responding to a survey about the issue have received a citation for ligature risk within the last two years, the report notes.  Facilities spend an average of $15,600 per bed to address these issues, again to meet the individual assessments of surveyors who may contradict one another.

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NABH urges Medicare to institute a more standardized approach to assessing facilities for ligature risks and offer more guidance on areas that present the highest risks.  These steps would reduce the likelihood of high spending on lower-value modifications.

Lastly, the organization is seeking revisions to enforcement of the Emergency Medical Treatment and Labor Act (EMTALA), which is intended to ensure that anyone presenting to a hospital’s emergency department will be screened and stabilized regardless of their ability to pay for services.

While NABH supports the law and its mission to ensure access to care for all individuals, the law’s impact on the inpatient psychiatric environment is not the same as in acute care.

“EMTALA permits each provider to determine which clinicians are designated as ‘qualified medical persons’ (QMPs) who may screen patients for emergency medical conditions,” details the report.

“Some regulators, however, are using EMTALA to raise the baseline licensure requirements for QMPs in inpatient psychiatric facilities. This approach upends decades of accepted clinical practice, and fails to account for widespread shortages of clinicians with psychiatric expertise.”

The law is also putting pressure on some inpatient facilities to admit involuntarily committed patients, regardless of that facility’s ability to manage the risks those patients may present to themselves or others.

“EMTALA should not be used to address the shortage of facilities that treat involuntarily committed patients,” NABM asserts. “Federal regulators should respect state procedures for involuntary commitment, including state arrangements for facility designation and patient transfer.”

The ability for inpatient psychiatric facilities to meet Medicare compliance requirements can have major effects on the commercial insurance industry, as well.

These facilities tend to operate under extreme financial constraints, and the more they spend on Medicare compliance, the more they will need to charge commercial payers to compensate.

The Centers for Medicare and Medicaid Services has made significant efforts to reduce administrative burdens for acute care and physician providers, but has not yet addressed similar pain points in the behavioral health ecosystem.

“These concerns lie at the heart of CMS’ ‘Patients Over Paperwork’ initiative,” the report points out, referencing Administrator Seema Verma’s signature effort to slash redundant, costly requirements for providers.

“CMS should take this opportunity to modernize its guidance and standardize its survey practices. The proposals outlined here would cost CMS little to implement, and would lift a heavy burden from psychiatric facilities and their staff without affecting—and perhaps even improving— care quality and access for patients with severe behavioral healthcare needs.”

Reforming the application of B-tag regulations, which are fundamentally more than half a century old, could significantly reduce unnecessary spending and increase financial security for inpatient psychiatric treatment centers, as would improving the process of assessing facilities for compliance with ligature risk rules and EMTALA protocols.

“Adopting less burdensome requirements would benefit the healthcare system overall by reducing unnecessary costs, and by bringing greater stability and predictability for providers as they navigate the regulatory environment,” stresses the NABH.

“In addition, patients may directly benefit from reduced regulatory burden as clinicians are able to shift more of their attention—and facilities are able to shift more of their resources—away from compliance for compliance’s sake and toward initiatives that meaningfully contribute to safe, high-quality care.”