3 min read

Hospital Price Transparency is Here

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In 2019, the President issued an executive order expanding on previous price transparency measures for healthcare providers.

Starting January 1, 2021, hospitals must provide patients with clear, accessible information regarding their standard charges for the items and services they provide.

The government’s stated goal is to put healthcare price information in the hands of consumers, with the idea that this will allow patients to make more informed health care decisions.

Indeed, some patients have expressed a desire for price transparency, but many will have to be educated about it.

Some states already have legislated transparency requirements, resulting in healthcare organizations publicly posting their Charge Description Master (CDM) data, but this is just a starting point toward satisfying the new federal requirements. 

Under the requirement, charges must be posted in two ways:

  1. A comprehensive machine-readable file that includes the following standard charges for all hospital items and services:
    • Gross Charges
    • Discounted Cash Prices
    • Payer-specific Negotiated Charges, and
    • De-identified Minimum and Maximum Negotiated Charges
  2. A consumer-friendly display that includes the following standard charges for at least 300 “shoppable” services (or as many as the hospital provides if less than 300) that are grouped with charges for ancillary services that are customarily provided by the hospital:
    • Discounted Cash Prices
    • Payer-specific Negotiated Charges, and
    • De-identified Minimum and Maximum Negotiated Charges

Tip: These shoppable services can be determined by using volume of claims to determine the most frequent procedures.

Compliance Concerns

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Although the hospital price transparency rule is looming, according to a recent survey by Guidehouse Center for Health Insights for Healthcare Financial Management Association only 12% of hospital and health system executives responding said their organizations were ready to comply, with about one-third suggesting they were unprepared.

Citing concerns about disclosing rates to payers, media, and consumers, as well as a lack of an analytics infrastructure as the biggest obstacles they face.

Added to this, CMS may be underestimating the cost to hospitals to get on track with a new system.

The agency estimates the cost to be between $15,000 and $20,000 to meet the requirements, but it does not consider the time it takes to compile and organize the data.

The total cost of software, implementation services and internal resource allocation can add up to a total price tag of $40,000 - $80,000.

Steps to Take

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Complete a periodic review of your chargemaster now. It is vital that chargemaster data is complete, accurate, and up to date. While many hospitals review prices yearly it is suggested that data be reviewed more often to keep it accurate – perhaps quarterly. In general, the broader the range of comparison, and the more current the datasets, the more effective an analysis will be.

“An important step for hospitals to take is to evaluate their chargemaster pricing to balance costs with the quality of care they deliver while providing information to their patients in a consumer friendly way”, according to Nicole Querio, Director of Customer Experience at efficientC.

Revenue Cycle Matters Tip: If your hospital already has a price estimator, you can check with the vendor to see if the software has a public-facing feature that will meet CMS requirements. That could give you a jump start on meeting the mandate.

The Penalty

Healthcare organizations who want to avoid financial penalties will want to have a strategic plan in place to comply with the mandate.

Some larger hospital system executives may be willing to absorb the $300/day penalty over making the changes for price transparency. Most smaller, rural or critical access hospitals don’t have the financial wherewithal to use a “pay the penalty” strategy and should get going right away.

Other hospitals are taking a wait and see approach, hoping that somehow the rule gets delayed or rescinded.

“We’re recommending to our customers not to expect a postponement or elimination of the mandate. Get a plan in place and get started”, says Lori Zindl, President of efficientC and OS, inc. “You’re going to have to comply with the regulation, it’s not going to go away.”

For Those Who Are Not Quite Ready

As the clock starts to run out for organizations to get this mandate in place, the efficientC and OS inc. teams have been advising customers on how to approach the looming deadline. Our best piece of advice has been that it is not too late to get started. There is still time!

If you have not started this initiative and are looking for help, reach out to your efficientC and/or OS inc. representatives. We have revenue cycle experts on staff that can provide guidance on options and resources to help you get started.