It’s almost impossible to overestimate interest in price transparency. People want to know how their healthcare prices are determined, and payers do, too. But getting that information has proven to be a challenge. Why? Partially because so much pricing data isn’t readable or usable.
What makes healthcare data so hard to define and use? Historically, finance, actuarial, and contracting teams haven’t gathered or shared enough key information about pricing at the micro level. Consequently, a payer has no ability to make adjustments by independent services or categories. Rather, it might commit to boosting its “total contract value” by a certain percentage. That’s not a winning solution because it sets an artificial floor that has zero bearing on individual services, procedures, or cases.
The Case for More Accurate Price Transparency
One way around this problem is through comprehensive price transparency, which can allow for better precision and control over where to make increases and decreases. We saw Arkansas Blue Cross and Blue Shield try this approach successfully. Its leaders were getting ready to raise rates in sync with CMS rate increases. However, they took time to dive deeply into their true position. They learned they weren’t positioned as strongly as they assumed within a specific hospital system. Accordingly, they decided to forgo an annual rate bump in exchange for having a much better pricing position that attracted positive attention.
The bottom line is that healthcare pricing is complicated, whether you’re on the side of the price setter or the price taker. The public likes to assume that health insurance companies decide what a procedure costs. That might be the case with large, national insurance providers, but it’s not true across the board. Most insurance providers are smaller. Plus, they may never have had the opportunity to be informed or strategic about their pricing. For them, meeting hospital pricing demands has been a mainstay. But all that’s about to change.
As smaller providers get more access to thorough, complete price transparency information, they can be more tactical when building relationships with hospitals, exchanging price savings for member volume, and improving their overall spending.
Say a provider realizes most of its members are statistically unlikely to experience cardiac issues. It can then accept higher cardiac procedure rates in exchange for discounts in a different area that affects a higher percentage of the target population, like oncology. At the end of the day, the hospital gets the average rate increase it wants, and the provider exercises smart negotiating power.
When the COVID-19 pandemic first came into the country and hit hospitals like a tidal wave, we saw a rapid shift to digital care. More than half of consumers say their providers now offer virtual care. And use of digital tools like telemedicine increased by 50% during the first quarter of 2020, compared with the same period in 2019. These stats are a sign that providers must work to truly understand the importance of digital-forward engagement strategies when it comes to building strong patient relationships.
Although recent vaccine approvals have brought some much-needed good news, the U.S is currently reckoning with the deadliest wave of the pandemic. This means that in addition to a continued public health crisis, patients and providers alike will still be faced with significant economic hardship as we enter 2021 – intensifying the need to improve the healthcare financial experience.
How can this be done? Here are three trends that I see coming to fruition as we continue fighting this pandemic in 2021:
2021: The Year of Smarter Heath-Tech Adoptions
The economic hardship brought on by the COVID-19 pandemic has affected both the patient and provider. With the highest unemployment rates since the Great Depression this year, patients are feeling more cost-conscious about care decisions than ever. According to our recent consumer survey, 84% of respondents are worried about paying their healthcare costs in the next year.
What do you do when you’re on a budget? You shop around for the best price. Patients were already increasingly expecting healthcare to mirror their experiences with e-commerce and shopping before the pandemic. The financial strain caused by COVID-19 simply exacerbated this shift, lighting a fire under providers to adopt smart technologies that can consolidate patient information and “consumerize” the experience. Cohesive, consolidated and consumer-centric digital access points for all patient interactions have become the norm, and providers will need to adapt to meet these expectations.
As for providers themselves, pandemic-related shutdowns and stay-at-home orders caused financial strain for these organizations, with millions of elective procedures cancelled. This alone resulted in an estimated loss of $16.3 to $17.7 billion per month in reimbursement and $4 to $5.4 billion per month in net income for health systems.
In response to this financial strain, providers will increasingly look to invest strategically in tools that support their business goals and help them gain a competitive edge. Over half of consumers have delayed care due to fear of catching COVID-19, so getting patients back in the “door” – whether it is physically or virtually – will be crucial. Think about it from the point of view of ap patient – wouldn’t it make a difference to you if your doctor had the option of filling out paperwork and insurance information online, as opposed to waiting in a crowded waiting room?
In healthcare, it seems that nothing is easy — technology, regulation, privacy, and security. And now, pricing. Efforts are underway to make prices more transparent; this is a tentpole issue for the Trump administration, which wants hospitals to begin posting “shoppable” prices online in 2020.
According to reports, some hospitals are facing some challenges for doing so and are trying to figure out how they’ll be able to meet the requirement.
The Centers for Medicare & Medicaid Servics (CMS) offered the proposed rule, which mandates that hospitals publish their payer-negotiated rates for “shoppable services” starting on the first of the year. This is part of CMS’ outpatient payment rule. The proposed rule is expected to be finalized by November 2019.
To read my full report on this pricing transparency battle, check out my article on MultiBriefs here.