Cost of New Discharge Rule Will Be Above CMS Estimates, Hospitals Say

CMS issued a proposed rule revising discharge-planning requirements in late October, estimating that the changes would cost $22,000 per hospital annually and $6,400 for critical access hospitals. The American Hospital Association, the Healthcare Financial Management Association (HFMA) and others have challenged the cost estimates, claiming the revisions will cost nearly 10 times as much as the CMS estimates. Hospitals must meet the discharge-planning requirements to participate in Medicare and Medicaid.


HFMA estimates the proposed requirements will cost $965 million, or an average of $200,000 per hospital annually. The estimate is based on the experience of hospitals already conducting discharge planning.


In its proposed rule, CMS wrote it assumed that private payers, estimated to cover half of all patients, would offset much of the additional cost of the new requirements. However, advocates take issue with that assumption. For example, according to the California Hospital Association, many of its hospitals primarily serve Medicare, Medicaid, undocumented and uninsured patients. An association spokesperson said that many facilities do not have the payer mix to balance the increased costs associated with compliance with the new regulations. (“Hospitals Raise Discharge-Rule Cost Concerns, Urge Delay,” HFMA Weekly, January 8, 2016)


HFMA wrote in a letter to CMS that:


“. . . we are deeply concerned with its [CMS} estimate of the time required to create a discharge plan such as the one envisioned in the proposed rule. Based on our members’ experience, on average it requires 45 minutes to create a discharge plan. Inserting this estimate of time into CMS’s estimate yields a cost of approximately $965 million or $200,000 per hospital (13,000,000 patients x $99 per hour fully loaded staffing cost x .75 hours = $965 million).”


HFMA also noted in its letter, “Given that Medicare payment for outpatient services doesn’t come close to covering the cost to provide services (-12.4 percent margin in 2013), we ask that if CMS finalizes this proposed rule, they increase OPPS payments to cover the costs of this new mandate.” (“Hospitals Raise Discharge-Rule Cost Concerns, Urge Delay,” HFMA Weekly, January 8, 2016)


The American Hospital Association asked CMS that the rules not become effective until two years after the final rule is issued. The extra time would help hospitals:


  • Work with electronic health record vendors to incorporate needed changes
  • Implement labor, training and work-flow changes
  • Incorporate elements of the discharge evaluation and transfer criteria into records
  • Align those records with modified clinician work flow


There is a 60-day comment period on the proposed rule.



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