Practice Management News

Expanded Hospital Price Transparency Rules Worry Half of Providers

A recent survey found that nearly half of providers have concerns about disclosing negotiated rates under newly proposed hospital price transparency rules.

Hospital price transparency

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By Jacqueline LaPointe

- Nearly half of providers recently polled by PMMC and Chilman Law Firm said publishing their negotiated rates with private payers were their biggest concern related to the Trump Administration’s recent hospital price transparency executive order, while about a quarter of providers were worried about their inability to provide out-of-pocket cost estimates.

“Not surprisingly, the biggest concern is around disclosing negotiated rates with payers,” the survey of more than 100 healthcare providers stated. “There is a general concern in the industry that this will put healthcare providers at a disadvantage when it comes to negotiating contracts with payers, because the rates they privately negotiate will now be publicly known.”

Hospitals currently have to publish their chargemaster rates – which concerned 92 percent of providers in a previous PMMC survey – but the organizations may have to start posting their contractual allowable prices according to a proposed rule from HHS following the executive order.

Signed on June 24, the executive order directed HHS and several other agencies to advance healthcare price transparency to empower patients and consumers. President Trump said the executive order will “fundamentally change the healthcare marketplace” by directing HHS to require hospitals to “publicly disclose amounts that reflect what people actually pay for services in an easy-to-read format.”

But the recent PMMC and Chilman Law Firm survey confirms what hospital advocates have said: disclosure of negotiated rates worries hospitals.

“Disclosing the negotiated rate between insurers and hospitals will not help patients make decisions about their care. Instead, this disclosure could harm patients by reducing patient access to care. This is the wrong approach to price transparency, and the administration should reverse course on this provision,” the American Hospital Association (AHA), Federation of American Hospitals (FAH), America’s Essential Hospitals, Association of American Medical Colleges (AAMC), and Children’s Hospital Association said in a joint statement.

Disclosure of negotiated rates would also “fuel anticompetitive behavior among commercial health insurers in an already highly concentrated insurance industry,” resulting in fewer choices for patients, Rick Pollack, AHA president and CEO, added in a separate statement.

Despite hospital pushback, healthcare price transparency requirements are unlikely to go away. The Trump Administration has committed to aggressively pursuing healthcare price transparency, meaning hospitals need to start addressing the potential new price transparency requirement as soon as possible, experts from PMMC and Chilman Law Firm stated.

“Healthcare providers not only need to comply with the new upcoming mandates, but need to develop an integrated strategy that aligns charges, prices, and out-of-pocket costs,” said Greg Kay, senior vice president at PMMC.

As charge, price, and cost information becomes more available in easy-to-understand formats, consumers will start to shift their healthcare purchasing mindsets, buying with value in mind, Key explained.

For hospitals, that means a price transparency strategy must be in place to help consumers understand pricing and quality information. Providing out-of-pocket cost estimates will be a key component of the strategy.

Out-of-pocket cost estimates deliver personalized information to consumers regarding price. However, PMMC survey data showed that just 15 percent of hospitals have online estimates and even fewer organizations have real-time eligibility verification to determine out-of-pocket cost estimates while the patient is in the office.

But providing these personalized cost estimates can be as easy as turning on a feature within the EHR system, said Melissa Greer, vice president of revenue cycle at UCHealth. The health system recently partnered with its EHR vendor to create a price transparency feature that identifies and distributes cost information that is meaningful to patients.

“It makes a lot of sense for the tool to be built within the electronic health record,” she recently told RevCycleIntelligence.com. “That's where all the historical data is held, all client data, and hopefully all contract information.”

Alternatively, hospitals and health systems can partner with vendors to create systems that offer personalized out-of-pocket cost estimates. These types of hospital price transparency technologies are likely to quickly emerge as CMS and market pressures push providers to demand better control of their pricing information and what consumers see, added Kay.

“As patients become consumers of healthcare versus just recipients of healthcare, our industry will see more disrupters entering the space,” he said.