Industry Insights

Part Four - Implementing Accurate Data to Drive Price Transparency

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Transcribed Video Content Below

So, now that we've talked about contract governance, we've talked about negotiations, we've talked about chargemaster rate setting, we're going to shift here and talk about pricing transparency and what that really means.

[Q&A]

Brad: And before you move on, Robby, we have another question that just came in related to the other section.

Q: So we are seeing an increase in deductibles at our organization. Does this cause the overall value of our contracts to decline?

A: Robby: Yes, so that's actually a very good point. As we get into the negotiation process, one of the things…and without scrolling back through the maturity matrix, one of the things that's going to be important in negotiations is what the overall patient mix for that payer is. So as deductibles continue to rise for the patients...I think the average deductible was $8,200 on the exchange. For employer-based plans, that's probably somewhere around $2,000 to $2,500, I'm not sure. But as patient responsibility continues to rise and patients are beginning to pay for more and more of their healthcare, the health of that patient population financially is going to become important in our negotiations. So if we can start to measure patient payment effectiveness, how often does that patient population pay? How quickly do they pay? How much collection effort do we have to put into getting them to pay? If we can start grading Aetna's population against Blue Cross's population, it will really start helping us to better understand the true value of that contract, and where the money is going to come from. That's going to be real important as deductibles continue to rise, especially with the exchange programs.

[END Q&A]

Brad: Great. Thanks, Robby.

Robby: All right, so moving on to pricing transparency, what we're really talking about when we talk about pricing transparency. Let's do more of a level set and talk about the evolution of price transparency. The term, price transparency, 5 to 10 years ago, simply meant presenting a patient with an estimate when they walked in the door for the service. Most organizations are already doing that today in some way or another, and the term “pricing transparency”, has taken on a new form. And unfortunately, as healthcare providers, we're not controlling that message and we're not controlling that definition. And that price message today is starting to become all about consumerism and all about allowing patients to price-shop.

By now, I'm sure everyone's seen this NPR article that talks about MedSolutions' rate versus Gulf Coast. And the price at MedSolutions was $286 to the patient, and the price, in the article, for Gulf Coast was $8,800, which, just looking at that, if I'm shopping around, of course, I'm going to go to MedSolutions. And that's what's being pushed out in the media today. So they're really controlling this price message.

But as healthcare professionals, we know that top-line charge for Gulf Coast really doesn't mean anything. So as we really start breaking it down, that $286 was really driven, most likely, from a fee schedule somewhere around $2,300, and the allowable the service was probably somewhere around $1,100. And then based off of the patient's perceived insurance, it will get down to $286.

This is the price that's being pushed out from MedSolutions is actually the patient price. But if we look at what the patient price would be for Gulf Coast, assuming an average allowable for MRI or CT scans, this was a CT scan, and that's probably a little bit high too, the real patient price, once you add in the deductibles, the coinsurance and the copay, is going to land somewhere around $380. So in the grand scheme of things, there's not that big of a difference. But what's being pushed out in the media is this $8,000 difference, and hospitals and health systems are really being demonized due to a lack of understanding of how healthcare actually works.

You and I both know top-line charges really mean nothing, but that's not what's being communicated to our patients. And at some point in the near future, health systems are going to have to start taking control of this message and start changing that narrative and begin pushing out actual patient estimates on to the websites and educating your patients about what it means and how we got there. So that's a lot easier to say than do, I'm sure.

And when we talk about pushing estimates out to the web, there's several factors that come into play. And the biggest one is making sure that you're educating your patients of what it means. You also need to make it easy to use, easy to find, and accurate so that patients begin to use it, trust it, and it becomes the real source that they go to when they want to understand what their health care cost is going to be.

Brad: And another question here, Robby.

[Q&A]

Q: Brad: And it's a good one related to publishing prices. How do you maintain confidentiality around rates when you're posting prices online?

A: Robby: Oh, yeah, that's a good one. There's, a lot of different ways we can do that, and it all becomes what information you push out. So the first one is probably the obvious one, and that's putting it behind your firewall, behind your patient login on whatever app, whether it's MyChart, or whatever it may be, it's actually making the patient login so that you can see who's using it and what they're actually using it for.

The other is, how much information do you want to display? Do you want to give an estimate for each facility in your system or do you want to scrunch them all together and give an average for your system? Or, do you want to give a range? We typically encourage people not to do a range, but if confidentiality is a big key around your rates, you can give a high and a low, one with major complications and one without just to give a little bit more of a range.

And then lastly, another one is, it's all about what information you present. If you're presenting top-on charges and then the patient responsibility piece, it's easy for people to back in, but if you take out some of that information such as charges or the allowable, it really starts to hide some of that. It's pretty flexible with how you want to put it out there, but it is a big concern.

[END Q&A]