Practice Management News

Are Hospital Price Transparency Rules a Solution for Consumerism?

Hospital price transparency is key to unlocking the solution for healthcare consumerism, but current CMS rules fail to deliver, said experts at the Value-Based Care Summit.

Hospital price transparency and healthcare consumerism

Source: Getty Images

By Jacqueline LaPointe

- In the face of rising deductibles and other out-of-pocket costs, CMS implemented and proposed several hospital price transparency rules meant to empower consumers to shop around for high-value healthcare services.

The federal agency believes that requiring hospitals to publish their chargemasters – which are considered proprietary information – and possibly extending that requirement to negotiated rates will create a patient-centered system that puts patients in control and provides the affordability and options they want as they take on more of the financial responsibility of care.

However, industry experts at Xtelligent Healthcare Media’s fourth annual Value-Based Care Summit in Boston disagreed with CMS.

“If the goal of this regulation is really to allow patients to shop for their care and make informed decisions, then what’s on the plate right now arguably doesn’t do that in the best way,” Kyle Sherseth, CHFP, senior manager of advisory services at nThrive, said regarding the established hospital price transparency rule in the Medicare Inpatient Prospective Payment System rule for 2019.

Furthermore, the whole notion of hospital price transparency is not the solution for addressing patient financial responsibility and the subsequent rise of healthcare consumerism, stressed co-panelist Matthew Fisher, partner and chair of the Health Law Group at Mirick O’Connell.

READ MORE: Going Above and Beyond the CMS Hospital Price Transparency Rule

Patients have been referred to as “consumers” as far back as the 1930s, but the ability to use purchasing power and decision-making to select services and providers based on quality and/or cost has not been as widespread until recently.

With patient financial responsibility increasing steadily over the last couple of years, consumerism is transforming the relationship between patients and their providers, and that shift is requiring a different type of price transparency.

“The term ‘patient is the new payer’ is very true,” explained Michael Rawdan, PhD, senior director of financial services and patient experience at St. Luke’s Health System in Idaho during the panel on healthcare price transparency. “We're beginning to install mechanisms so that there's an estimate for an out-of-pocket expense, and then there are mechanisms in place to make sure that those patients have the ability to afford.”

Industry experts dive into hospital price transparency and its impact on healthcare consumerism.
Panelists at the Value-Based Care Summit discuss new hospital price transparency requirements and best practices for hospitals.

Source: Kelsey Waddill

Giving patients and consumers personalized cost estimates rather than having them look up chargemaster rates is how the industry can create an empowered healthcare consumer, the experts agreed.

“You can put out a cost estimate, but that could be meaninglessness to an individual because if it's just your charge rate as opposed to the contracted rate with a particular insurance company, then you're going to have a great disparity,” explained Fisher.

READ MORE: Price Transparency, Consumerism Top Issues for Healthcare Execs

Even providing negotiated rates with each insurance company does not truly help consumers, Sherseth added. Determining the top shoppable services, their negotiated rates, and how to display that information in a consumer-friendly format will be a major data mining project for not just hospitals, but also patients and consumers shopping around for services, he stated.

Hospital price transparency as detailed in federal regulations and proposals also requires patients and consumers to have a decent amount of information to truly shop for services, Rawdan stressed. “Either the service type or CPT code, and that's tricky because patients don't always know that,” he said.

Ultimately, price transparency is just one of the components of addressing healthcare consumerism, and its role will be to allow stakeholders to enhance consumer-centric capabilities, Fisher said.

“It's probably more accurate than not that for transparency you're going to have all the information going out and then you're going to have third parties provide a turnkey solution that the insurance companies or hospitals and physician groups will implement because you're going to have someone who has more dedicated resources to throw at the problem and who can actually develop that solution,” he said.

Front-end technologies that enable price estimation and patient self-service are going to major solutions coming out of this hospital price transparency debate, the panelists agreed. These solutions will really help hospitals and eventually other providers control the patient financial experience.

READ MORE: Hospitals Take Aim at Healthcare Price Transparency Proposal

“If you can control that conversation by having them either log in, create an estimate on their own, or call your customer service department and get a really accurate estimate, then you're able to have that conversation, answer their questions, and really provide a better customer experience, which is going to pay dividends in the future for your customer service scores and all the payments that are attached to that,” Sherseth stated.

But back-end solutions can also help hospitals comply with price transparency rules while delivering solutions for consumerism, the experts added. Sherseth recommended that hospitals use a technology solution that can maintain revenue and coding changes electronically, so hospitals have a clean, accurate chargemaster to put up every year that also has defensible prices based on the cost of providing care.

Rawdan also said St. Luke’s is looking to implement a back-end solution that can consolidate medical bills for patients, which he feels will help the health system become that “one-stop-shop” for empowered healthcare consumers.

With the help of technology, hospitals should be striving to deliver a high-quality clinical and financial experience to patients by educating them on what is going on clinically while also providing information on the financial impact of their clinical care will be. And this should all be happening while the patient is in the office.

However, the price transparency market is in its early stages and a very low number of patients are actually using existing price transparency mechanisms to shop for care, Rawdan pointed out. Hospitals and providers also don’t necessarily have the answer for cramming all that education into the average nine-minute office visit.

St. Luke’s is testing strategies for addressing the financial experience. But price transparency rules from CMS should be encouraging greater collaboration between providers and payers, as well as other healthcare stakeholders, to make price transparency meaningful to the consumers, Fisher said.

Until the requirements do that, the current rule regarding chargemaster rates will likely fade into obscurity as hospitals make their rates next to impossible to find to encourage consumers to reach out to their financial experts. The proposed rule will also face staunch industry pushback, which will likely result in years of litigation.

But the experts agreed that hospitals and practice-based providers should still be preparing for increased price transparency if not for complying with possible rules and regulations, then protecting the bottom line from the new healthcare consumer.

Join us in Austin June 3-5, 2020 for the Value-Based Care Summit & Telehealth20!