4 Strategies for Providers to Improve Hospital Price Transparency

June 04, 2018 - Federal and state governments are ramping up efforts to increase hospital price transparency as consumers become more responsible for their healthcare costs under high-deductible health plans.

However, provider organizations are struggling to develop strategies to meaningfully inform consumers of their patient financial responsibility. A group of researchers recently found that only 21 percent of hospitals had the ability to provide a complete hospital price estimate for a primary hip replacement.

And limited hospital price transparency has gotten worse, their recent study in JAMA Internal Medicine showed. The percentage of hospitals that could give consumers a complete price estimate dropped from 48 percent in 2012, while the percentage of hospitals that couldn’t offer any price information rose from 14 percent to 44 percent in the same period.

In light of limited hospital price transparency, governments and industry leaders have recently bolstered their efforts to give consumers accurate estimates and help hospitals provide those estimates.

In April 2018, CMS proposed a new rule that would require hospitals to post a list of their standard charges online by Jan. 1, 2019. Hospitals would also need to update that list at least annually to reflect current hospital prices.

READ MORE: Key Ways to Boost Collection of Patient Financial Responsibility

The federal initiative resembles several state regulations. For example, hospitals in California must disclose prices for the top 25 most commonly delivered outpatient services and submit their hospital chargemaster and pricing information to a state-run website.

Colorado also recently implemented a law that requires providers to give their patients a list of the 15 most commonly delivered services.

CMS Administrator Seema Verma told HealthITAnalytics.com that these initiatives are “just the beginning” of hospital price transparency efforts.

“When you go to receive a healthcare service, there are always going to be situations where you can’t know what the costs will be, especially around emergency situations and some acute situations,” she said. “But for a lot of us, we’re going in for planned procedures. You should be able to know what it’s going to cost you.”

With government actors pushing for hospital price transparency, hospitals and health systems should be developing and improving their abilities to provide patients with accurate price estimates. Hospitals and health systems should consider the following strategies and steps to improve their healthcare price transparency efforts and comply with regulations.

Prepare for hospital price transparency

READ MORE: The Role of the Hospital Chargemaster in Revenue Cycle Management

Once the organization has committed to bolstering price transparency, hospitals and health systems should identify their lower-priced, higher-demand services, the Healthcare Financial Management Association (HMFA) advised.

Patients are more likely to seek pricing information on these services since they are commonly delivered. State and federal governments are also targeting these services as part of their price transparency initiatives.

While pricing information is key, hospitals and health systems should also consider linking cost data with other important information sources, such as relevant and publicly reported quality or patient safety scores, the organization suggested.

The additional information helps patients to identify high-value services instead of just lower cost healthcare.

Additionally, hospital and health system leaders should take into account how consumers and other purchasers will access pricing information. Hospitals can either disclose prices when patients request an estimate or publicly post charges on a public or a password-protected website.

READ MORE: Preparing the Healthcare Revenue Cycle for Value-Based Care

How organizations publicize information will depend on state regulations. California, Florida, Maryland, and some other states operate websites with hospital chargemaster and pricing information.

Posting pricing information online may help hospitals and health systems get ahead of the healthcare price transparency push. With some states and now the federal government seeking online hospital pricing information, organizations with online pricing access may find it easier to submit the necessary data to government officials.

Allowing access to hospital prices online is also a more convenient option for patients. As smartphone adoption rises and technological innovations continue, patients are seeking healthcare cost information in the palm of their hands.

Consider a bundled pricing strategy

Once hospitals and health systems prepare for hospital price transparency, the organizations may want to consider bundled pricing.

When patients undergo a procedure at a hospital, they typically receive a series of services encompassed in an episode of care. For example, a total joint replacement episode can include pre-admission planning, surgery, post-acute care, and complications management.

Care episodes can complicate price estimates. Patients may seek pricing information for the surgery, but really want to know the total cost of care for the episode.

Therefore, hospitals and health systems that offer bundled pricing may be in a better position to serve their patients and offer more accurate price estimates, PricewaterhouseCoopers explained.

“Developing an ‘all-inclusive’ bundled service offering for a hospital’s core service is one way for health systems to build volume because it is more representative of the traditional retail experience,” the organization wrote in a 2016 report.

“A successful bundling strategy may also lead to better brand recognition for the hospital. Most health systems theoretically are likely to reduce costs, too, simply by reducing variations in how they perform medical procedures.”

Educate staff on how to discuss prices and patient financial responsibility

As consumers gain the ability to access hospital prices, hospital and health system leaders should educate their providers and office staff on how to discuss healthcare costs and patient financial responsibility.

Only 23 percent of providers in a 2017 survey said they always discuss patient financial responsibility with their patients prior to care delivery, while 36 percent admitted to never having the talk with their patients.

Provider inexperience with patient financial responsibility discussions is detrimental to organizations seeking increased hospital price transparency. As consumers gain access to pricing information, communication will be key to ensuring patients understand pricing and their financial responsibility, especially since insurance coverage may change how much a patient actually pays.

To accurately communicate hospital pricing information to patients, the American Hospital Association advised providers and staff to:

• Emphasize that prices are estimates
• Notify patients of cost changes that may occur based on a patient’s health or complications
• Explain what is and is not included in the estimate (e.g., physician fees)
• Tell patients what other medical bills they may receive for the service

Providers and office staff should also be able to address and explain pricing for patients covered by a range of health plans, HFMA stated.

“Healthcare prices vary for different care purchasers and payers,” the organization wrote. “Medicare and Medicaid programs set the prices they will pay providers, for example, while providers and health plans negotiate prices for insured patients based on such factors as anticipated volume of business and the cost to the provider of making the service available. As prices become more transparent, be prepared to explain why prices may be different for different care purchasers.”

Implement price transparency tools

Technology and software can support hospitals and health systems with price transparency.

For example, Oklahoma-based INTEGRIS health system developed a price estimate tool that provides about 240,000 prices for outpatient procedures each year. The Priceline tool gathers pricing information on outpatient services and links the data to information on financial planners for consumers to use before, during, or after their encounter.

The health system reported that the price quotes from the tool are accurate, being between three and five percent of the financial charge.

INTEGRIS not only saw healthcare price transparency increase after Priceline implementation, but also their hospital costs decrease. Putting transparent, accurate pricing information into the hands of patients and providers helped the health system direct patients to lower-cost clinicians within the health system’s network.

Accurate pricing estimates prior to care delivery also increased point-of-service patient collections from $1 million in 2008 to $18 million by 2015.

Software and other health IT systems that rely on historical claims data can also help hospitals and health systems boost price transparency, explained Sean Lundy, CMPE, of the Hand & Wrist Center of Houston.

“It is critical for providers to use accurate estimates when collecting the patient responsibility, as inaccuracies can generate added follow-up expenses, such as refunds and bills, which may turn profitable procedures into losses,” he wrote.

“Since obtaining current allowable amounts directly from payers can be challenging, to say the least, providers should use software tools that assess historical data and estimate allowable expenses for specific payers and procedures.”

Hospital price transparency is trend unlikely to dissipate in the near future. Healthcare consumers are increasingly becoming more responsible for their healthcare costs under high-deductible health plans and industry leaders are attempting to realign the healthcare industry with that movement.

Price transparency will continue to play a key role in helping consumers receive high-value care and hospitals and health systems will have to consider how their organizations can support patients who are taking control of their healthcare.