by Gordon Jaye, Vice President Hospital Operations
Healthcare is complex and warrants complex responses. This means seeing challenges as opportunities for change – inspiring innovative solutions to ensure positive change. The notion of enhancing healthcare system adaptability through price transparency is one such response. The concept behind price transparency is to disclose to patients what they will actually pay for care which will empower them to price shop for medical services so they can make informed decisions about their care and how they’ll pay for it.
The plea for healthcare price transparency has gained momentum over the years. Under the current 2018 Centers for Medicare & Medicaid Services (CMS) issued rule, hospitals are required to publish standard charges online and update them at least annually. Although well-intended, the current CMS requirements landed flat as many hospitals complied by simply posting thousands of chargemaster rates. To many patient-consumers, this information has created additional confusion as chargemaster rates don’t necessarily reflect the collection of supplies, services, and providers for each episode of care. Instead, patients are faced with the daunting task of making sense of the line-by-line rates posted on their provider’s website. A 2019 survey confirmed this by revealing that 58% of hospitals reported the requirements created more confusion for its patients.
Earlier this year, President Trump signed an Executive Order significantly expanding healthcare price transparency. Beginning January 1, 2021, hospitals will be required to provide patients with easily accessible standard charges information for hospital items and services. To comply, hospitals must publish standard charges in two ways: 1) A comprehensive machine-readable file, and 2) A list of “shoppable” services that can be scheduled by a patient in advance. The “shoppable” services must include the 70 CMS-specified and 230 hospital-selected services provided by the hospital.
Price transparency has been publicized as a way to reduce health care spending as higher-cost providers react to patient comparison shopping and lower their prices to improve value. However, many in the industry believe it has yet to garner that success. Some point to implementation as the crux rather than a fundamental issue with the concept of price transparency itself.
A national survey of health plans conducted by the American Journal of Managed Care helps to shed some light on opportunities for advancing the efficacy of price transparency tools. The below highlights insights that can be considered by healthcare providers as they work towards enhanced price transparency that is actionable for patients.
Survey Objectives:
“Policymakers have growing interest in price transparency and in the kinds of tools available to consumers. Health plans have implemented price estimator tools that make provider pricing information available to members; however, systematic data on prevalence and characteristics of such tools are limited. The purpose of this study was to describe the characteristics of price estimator tools offered by health plans to their members and to identify potential trends, challenges, and opportunities for advancing the utility of these tools.”
Tool Outcomes
Out-of-pocket estimates based on member benefits are recognized as one of the most useful features by 77% of the plans. Additionally, 77% reported the ability to compare prices for services across providers useful -- 68% reported having access to estimates for a wide range of services beneficial.
Of the 55% of respondents that had evaluated their price estimator tool:
- 19% reported increased use of lower-cost providers,
- 16% reported member out-of-pocket savings
- 16% reported employer cost savings
Common Challenges
The common challenges reported by the survey respondents include:
- 58% reported a limited member uptake
- 58% reported a lack of member awareness
Takeaways
The overall usefulness of a price transparency tool depends on the data displayed. Informing patients of what they will owe for care and helping them to understand the overall financial impact is key. From our perspective, the best estimation processes implement sophisticated algorithms to determine a patient’s out-of-pocket costs. The calculation should include charges for each episode of care for all facilities and providers, down to the physician level and DRG to account for variations such as the physician fee schedules.
However, there is an important caveat to estimation processes – estimation performs best when it is combined into daily operations. If not used and maintained regularly, estimation accuracy will decrease and trigger staff neglect and patient distrust. In other words, hospital price transparency work is never done.
According to the research, price transparency tools should present data in a clear format with minimal volume and descriptive labeling to not overwhelm patients. For instance, patients should be able to input their health plan specifics to learn what is covered by insurance and what their financial obligation will be. Additionally, hospitals should have a clear understanding of their patient mix to facilitate tool usage and further tool development and supplements. As an example, a toll-free phone line that is dedicated to patient estimates can supplement the process and serve patients who are unable to access the internet.
Healthcare price transparency is here to stay and will continue to evolve as regulations, technology advancements, and experience gain momentum. Whether your hospital is a small rural facility or part of a large health system, price transparency is a smart investment. Price transparency has the power to enhance the patient experience and improve financial performance – it’s a concept that should be at the forefront of your organization's RCM strategy.
Learn more about PatientMatters Online Patient Estimation solution here.
