Consumerization has finally entered the healthcare realm. Patients and insurance payers don’t just want a good care experience from hospital systems; they want clarity in the form of price transparency. And they’re not the only ones.
Both the federal government and the Centers for Medicare & Medicaid Services (CMS) have set transparency expectations. Nonetheless, as The Wall Street Journal noted in December 2021, many hospitals have dragged their feet. And despite about 335 warnings from CMS, no hospitals have been fined, according to Fierce Healthcare reporting. However, it’s only a matter of time before consumer-centric healthcare and upfront hospital pricing data become the norm.
To be fair, it can be tough to get all hospital systems on the same page. Though CMS expectations ask for pricing data delivered via a comprehensive, machine-readable file, its directive has been interpreted differently by different hospital systems. There are nearly as many file formats as there are hospital systems publishing data. After all, hospital pricing can be complicated depending upon the patient’s needs, running the gamut from daily flat rates to rates based on the severity of the patient’s illnesses to bundled services that include special terms for quality of care.
Plus, the methodology for contracting and reporting will vary from one insurance payer to another. If a consultant uses bad or incomplete information to guide negotiations, the outcome can be less than accurate. For instance, our company has seen a large Arkansas provider network calculate different prices for a number of regional payers. How? It was publishing average prices, not contracted ones. This led to confusion and frustration for all stakeholders involved and required hundreds of hours of work to unwind and explain before real negotiations could take place.
By Christine Cooper, CEO and member; and Jack Towarnicky, member, aequum LLC.
Effective healthcare consumerism requires timely access to accurate provider and hospital fees and estimated out of pocket costs of services – before receiving care. Price transparency puts employer-sponsored benefit plans in the driver’s seat, empowering participants with information that helps them be more prepared, involved and informed in proactively making cost-conscious decisions about their health care options and utilization.
This empowerment is especially important in today’s economy. Many workers are “financially fragile” and have not set aside savings specifically earmarked for out-of-pocket medical expenses, including regular cost sharing – deductibles, copayments, coinsurance. As healthcare continues to see rising cost inflation, price transparency is more in the spotlight, triggering a (re)introduction of healthcare consumer strategies. By taking advantage of price transparency, making comparative cost and quality information available, and capitalizing on cost containment opportunities, plan sponsors and their participants can fully optimize the value of their health benefits plan.
Taking Advantage of Price Transparency
There is complexity in healthcare due to a lack of price transparency. This is especially prevalent in medical billing. Health policy changes have been enacted to make cost information in the healthcare industry more easily available to consumers with the expectation that price transparency will provide better metrics for healthcare spending. The appeal of price transparency is based on the view that increased consumer choice and less information asymmetry will aid in achieving higher-quality, lower-cost health care.
Legislation is now in effect to better enable Americans with knowing the true cost of provider health services before receiving care and submitting a claim. Federal law now supports employer-sponsored health plan access to price transparency with added levels of protection and fairness. Executive Order 13877—Improving Price and Quality Transparency in American Healthcare to Put Patients First, significantly expanded the requirements for hospital and other medical provider price transparency.
The healthcare revenue cycle is an unnecessarily complex tangle of patients, providers, employers, and insurance companies. Patients and other parties are often frustrated with medical claim submission and reimbursement procedures, which can take months to resolve. This has forced a closer look at ways to increase the transparency of payment structures – offering the potential to address long-standing patient concerns while ensuring a more stable revenue source.
One of consumers’ chief concerns is the final cost of care. Over the last two years, many patients have lost their jobs and health insurance, leaving them highly cost-conscious. Patients require more cost predictability as they continue to navigate the financial impact of the pandemic. Insurance eligibility and payment estimation tools enable providers to generate reliable out-of-pocket costs at the time of scheduling. For cost-conscious consumers, this helps drive better-informed care decisions, provides options of payment plans or financing, and is an opportunity for providers to improve a critical patient experience.
Price transparency has been a long-standing concern for consumers, and recently the federal government and states have taken steps to address the problem. The Price Transparency Rule, established by the Centers for Medicare and Medicaid Services, took effect on January 1, 2019. Still, hospitals reluctant to comply with the rule now face the possibility of a hefty $2 million fine, and with the No Surprises Act set to take effect next year, it’s clear providers must embrace billing transparency, or the government will force them to accept a less-than-ideal option.
Independent Women’s Voice (IWV) launches the Patient Protection Pledge, a promise to stand with patients and their right to know the price of healthcare services before receiving care. The pledge was designed to let constituents know which lawmakers and candidates are committed in their support for any bill that would require upfront genuine healthcare price transparency and cash prices for all medical products, procedures, providers, and services.
There is no issue that more dramatically pits the business-as-usual DC swamp against the interests of ordinary Americans. President Donald Trump recently called transparency, “the biggest thing ever done having to do with costs in health care.”
The pledge endorses full price transparency in health care, an issue which nearly 90% of Americans say is important to them. A whopping 98% of women age 40 and under support it, a critical cohort for Republicans and Democrats. Yet, efforts to make price transparency a reality have been clouded by healthcare lobbyists and special interest groups—like PBMs and PhRMA—who want to keep patients in the dark.
America’s current healthcare system is opaque, keeping consumers price-blind. It is wrong and unacceptable that Americans are not able to see healthcare prices in advance. We would never agree to buy anything else without knowing how much it is going to cost. Prices in health care should work the same way.
“Economists estimate that making healthcare prices transparent could drop healthcare costs for individuals and businesses down to the prices that cash-paying patients pay today, which average 40% lower than negotiated rates,” said Heather R. Higgins, CEO of IWV. “Leaders in Washington should support price transparency in health care—taking a stand for patients and against the dominant healthcare lobby enticing them to vote otherwise.”
“Less than 10% of healthcare spending is on emergencies. 90% should be shoppable. Patients deserve the right to know the price of healthcare services before receiving care, including real cash prices and negotiated rates with health plans, so they can make informed choices when shopping for care and coverage.”
Healthcare price transparency would allow patients to plan ahead for how to pay and shop among providers. It would open the door for Americans to make informed, value-driven decisions about their care.
Early signers of the Pledge include:
Senator Mike Braun (R-IN)
Rep. Mike Burgess (R-TX)
Rep. Tom McClintock (R-CA)
Newt Gingrich, Former. Speaker of the U.S. House of Representatives
Dr. Art Laffer, American economist and former member of President Ronald Reagan’s Economic Policy Advisory Board
Larry Van Horn, Executive Director of Health Affairs at Vanderbilt University
Rep. Ralph Norman (R-SC)
Rep. Bill Flores (R-TX)
The Patient Protection Pledge is a project of IWV. Co-sponsors of the Pledge include Free2Care and Patients for Real Prices.
The healthcare circles in the United States are reeled up by debates around the need for price transparency.
The federal agencies are coming up with regulations.
Healthcare associations are weighing in their concerns.
Physicians, patients, and economists – everyone is articulating the pros and cons in a rather plausible manner.
Wait. What has triggered this rush towards transparency?
To begin with, the healthcare costs across the country have gone from “extreme” to “unreal” in the last two to three decades. A regular MRI scan, for instance, costs twice as much as it does in Switzerland, another country where healthcare is considered “notably expensive.”
Worse still, one simply cannot tell how much money they might end up paying at a healthcare facility at any given point. A broken bone can take thousands of dollars to get fixed or at no cost at all – depending on a dozen factors that can vary drastically with each patient.
Frankly, there is no single moment that burst the bubble around the soaring healthcare costs. In many cases, what hurt patients more than the total cost of a procedure is the out-of-pocket expense that they are made to pay. The focus today has shifted to one fundamental question – how much money is justified for a given care procedure; and are we entitled to know it or not?
Cut to 2019, a movement to make care prices transparent is shaking the establishments across the US.
What is the government saying?
The government has taken the onus of ensuring transparency in healthcare prices. Last month, the White House issued an executive order aimed at making payers and providers publish the cost of each procedure available at their facility. The government believes that this step can get a long way in making patients take more informed decisions regarding their health and eliminate the opacity regarding the cost associated with such processes beforehand.
The intent here is to provide patients “access to useful price and quality information and the incentives to find low-cost, high-quality care,” something that can be a giant leap forward in the direction of enabling cost-effective care.
Healthcare is not without its issues. Seemingly, for each source asked what the biggest problem the sector faces, there is a differing opinion on what’s most important. I’m often perplexed by the lack of cohesiveness shown toward the industry’s leading issues, too, and sometimes wonder how many of us could name the most pressing threats to the industry, as agreed upon by the community. There are clear problems – interoperability, lack of transparency, disparate systems working against each other — to name a few. So, in the following series, I’ve asked some insiders for their opinions on health IT’s greatest problems, and as you’ll see, they responses received vary greatly.
Healthcare IT struggles mightily with patient information that is not in the medical record system, but has leaked into other locations in the healthcare organization (cell phone emails, USB drives, employee desks, etc.). Healthcare organizations have moved Protected Health Information (PHI) into HIPAA compliant electronic health records (EHRs) systems, patients maintain electronic copies of their health information, which they give to their different providers as they move between appointments. This “patient distributed information” becomes PHI, with all its associated compliance and legal burdens for the health care organization.
There is liability associated with this, and information governance strategies available that reduce the associated risks. Patient distributed information is present on smartphones, tablets, laptops, and the like are not sanctioned EHR (such as email, file directories, etc.). These devices are not part of the organization’s HIPAA compliant system, and never can be. Most healthcare providers ignore the problem, which eventually leads to catastrophic security failures resulting in patient privacy breaches, and career damaging incidents for the healthcare IT department.
To eliminate the problem, IT needs to look to integrate an information governance framework that can:
Interview employees to understand how they deal with and understand this issue.
Audit, usually done with software systems, to provide objective evidence and quantification of the presence of PHI on your digital systems.
Set specific policies and procedures employees can follow in each and every situation when they come into contact with “patient distributed information.”
Provide raining and review of policies and procedures work.
Automate the policies and procedures with software systems to ensure compliance.
Surveil your digital systems is the best way to monitor and review your program, as well as seek to improve it.
Acknowledge the increasing presence of patient distributed information on your digital systems, and have a plan for how to address it. Look to information governance to establish a strategy and program to address patient distributed information. With the proper policies, procedures, training, and systems in place your organization will be able to effectively handle and mitigate the risks.