- Hospital price transparency and interoperability are opportunities for hospitals to gain a competitive edge over their peers, CMS administrator Seema Verma recently stated.
“It is my hope you see price transparency and interoperability as marketing opportunities, not a competitive disadvantage,” the head of CMS recently told hospital leaders at the Federation of American Hospitals 2019 Public Policy Conference in Washington DC.
Both price transparency and interoperability are high on CMS’ priority list as of late. The federal agency recently started to require hospitals to post their chargemasters online in a machine-readable format and implemented several interoperability initiatives, including Blue Button 2.0 and the Promoting Interoperability programs.
CMS efforts to improve healthcare price transparency and interoperability contribute to the agency’s overarching goal of “creating a more competitive private market that drives value and lowers prices,” Verma explained.
“I believe that a key reason healthcare costs continue to skyrocket is the fact that healthcare prices are largely hidden from patients,” she said regarding the price transparency requirement. “Simply put, hidden pricing means healthcare providers don’t have to compete on cost. Transparency creates competition, and competition keeps prices down, because patients can shop.”
Similarly, interoperability empowers patients by giving them improved access to personal health data, resulting in more competition in the industry.
“With interoperability and the seamless flow of data, we can change the way healthcare in this country operates,” she elaborated. “Patients can have access to their health information to understand and engage in their healthcare to make the best and most informed decisions possible.”
Improving patient access to cost and quality information can help the healthcare industry function more like a private market, rather than a government-run system, the CMS head explained.
Private markets are more efficient than government-run programs. Medicare rule changes can take months, or even years, because of the bureaucratic system. Consumers and providers can drive change within a private market.
As a result, providers can compete based on their costs and quality, which will ultimately drive down healthcare spending, Verma stated.
However, hospitals have traditionally guarded their cost and quality information. Chargemaster prices are typically considered proprietary information and some hospital leaders fear exposing internal information without the right context can negatively impact their patient volumes and brand.
Hospitals have been particularly critical of the new price transparency requirement.
“Information on charges or on average charges is of limited value to consumers, as it will likely be significantly different from the amount they will be expected to pay,” the Healthcare Finance Management Association argued in May 2018. “Chargemaster prices serve only as a starting point; adjustments to these prices are routinely made for contractual discounts that are negotiated with or set by third-party payers. Few patients actually pay the chargemaster price.”
An overwhelming majority of providers (92 percent) in a recent survey also said they were concerned about the price transparency requirement. They primarily worried about how the public would perceive their charges.
CMS acknowledges that the requirement has its issues.
“Now, we recognize that this information doesn’t usually reflect the negotiated price that a person may pay. Also, price is only part of the equation – just as important is empowering patients to understand health care quality,” Verma stated in her latest speech.
But she encouraged hospitals to “go above and beyond the basic requirements” to give patients the information they need to truly make cost-conscious decisions. Additional efforts to deliver meaningful cost and quality information will only benefit a hospital’s marketing initiatives.
Hospitals already exceeding CMS requirements for price transparency tend to agree with the leader of CMS.
“As hospitals shy away and look at putting their chargemasters on their websites as an onerous task, we welcome the CMS mandate because we feel very strongly about patients having access to the appropriate tools to provide them with how much their healthcare will cost,” Francine Botek, Senior VP of Finance at St. Luke’s University Health Network, recently told RevCycleIntelligence.com.
“We also feel that we offer an extremely affordable option. We have enough information to understand that we are within our competitive arena, and we offer patients the most affordable price.”
St. Luke’s operates a website that gives patients personalized cost estimates based on their individual insurance coverage, as well as an online tool for patients to compare pre-insurance prices with a discount and post-insurance costs.
A specialty center in Washington is also using price transparency as a marketing tool despite not being required to post their charges online. Spokane Digestive Disease Center now has links to the state’s consumer-facing cost compare website, so patients can see the provider’s prices and do some comparison shopping.
“I knew there was a difference between ambulatory surgery facilities and the hospital outpatient department, but without having claims data transparency it was hard for others to see,” said the center’s CEO Scott C. Glennie, MHPA, CPA, CGMA, CMPE.
“It's hard to actually get your hands on accurate information. But now we have very accurate and up-to-date cost information that's easily accessible. At least in the state of Washington, it's pretty exciting that patients can now access relevant information.”
Right now, implementing tools and strategies that put meaningful cost and quality information in the hands of consumers can be a competitive advantage for providers. And CMS intends for their price transparency and interoperability initiatives to aid competition in the industry.
“This administration is committed to transforming our healthcare system to one where providers compete to provide affordable, high quality care, empowering patients, with better access to information, price and quality transparency,” Verma said. “We are about expanding choice and competition to lower costs.”