Costs of CMS' emergency preparedness plan worry providers

The federal government's plans to bring healthcare providers participating in Medicare and Medicaid under a uniform standard for emergency preparedness have raised concerns that the costs associated with compliance could further strain an industry already under pressure from reimbursement cuts.

Last December, the CMS proposed a rule that would require 17 types of providers, including hospitals, long-term-care facilities, home health agencies, nursing homes, hospices, transplant centers and community mental health facilities, to meet four core elements officials say are key to a comprehensive framework for emergency preparedness. The comment period closes March 31.

Providers would have to devise an emergency plan based on a risk assessment, develop policies and procedures on the plan and assessment, develop and maintain emergency communications that comply with state and federal laws, and develop and maintain a training program that is routinely tested by drills and exercises.

The CMS projected the total cost for the more than 83,000 affected healthcare providers at about $225 million for the first year and about $41 million annually in subsequent years. The agency put the average cost in the first year for individual hospitals at $8,000, $4,200 for home health agencies and $2,670 for hospices.

But critics contend those projected expenses fall well below what many facilities will have to undertake to update old emergency power systems—to keep air conditioning, heating units, sewage and waste disposal running during a power outage—to meet the new requirements.

In a member advisory letter (PDF) issued in January, the American Hospital Association raised the issue of cost, saying that while it supported the need for providers to be prepared for disasters both natural and man-made, it was concerned “…CMS may have significantly underestimated the burden and cost associated with complying with this rule.”

In an e-mail response, an AHA spokesman said the organization was still reviewing the rule and would be “examining whether the CMS has aligned its proposals with existing standards.”

The hospital association in Missouri—where the gravity of the matter was made clear by the 2011 tornado that destroyed a hospital in Joplin—said in a comment letter that its members support the expectation that all providers improve preparedness for disasters and coordinated response and recovery. But the Missouri hospitals also recommended a three-year timeline to implement the standards and called the requirements for backup power systems “draconian.” They also want all existing systems grandfathered.

Home care and hospice providers, meanwhile, are concerned that the proposed requirements are too detailed. The requirements include that home health agencies help each patient develop an emergency preparedness plan.

“The impact on the agencies is huge from a financial standpoint,” said Barbara Citarella, CEO of healthcare and management firm RBC Ltd., and a spokeswoman on disaster preparedness for the National Association for Home Care and Hospice.

Though she finds the ideas proposed by the CMS to be sound, Citarella said the agency needs to consider that home health and hospital providers have been largely left out of federal funding for disaster preparedness for more than a decade and are under intense pressure to lower costs because of declining Medicare and Medicaid reimbursement.

Follow Steven Ross Johnson on Twitter: @MHSjohnson