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Industry Insights

Navigating Price Transparency Requirements

Part One - The Pros & Cons of Price Transparency Strategies


Next: Two - Price Transparency in Ohio


Transcribed Video Content Below

Before we review the case study portion of today's webinar, let's briefly review the origins of price transparency and some of the common compliance efforts currently in the industry. The two main federal documents guiding price transparency are the Affordable Care Act and the 2015 inpatient prospective payment system final rule.

The ACA requires that hospitals publicize a list of their standard charges for items and services. The 2015 IPPS final rule offered a bit more guidance, explaining that hospitals have significant leeway to determine how to publicize that information. Possibilities include posting the chargemaster online, or advertising how patients can access the information.

However, many state legislatures also have enacted state specific price transparency requirements. The extent of those laws and the effects they have had on patient education differ widely. According to the 2016 Catalyst for Payment Reform report card on price transparency laws, which was released by the Healthcare Incentives Improvements Institute, only seven states lack any type of price transparency legislation. You can see on the figure on this slide, though, that while the majority of states do have legislation, the institute considers only a few of them to be high quality and/or effective.

This means that State Grade Card of Price Transparencymany revenue cycle leaders have long been juggling local and national price transparency requirements while trying to maintain overall compliance. And some of you, like our speaker today, are grappling now with preparing for newly passed laws that remain unclear in some respects, which is complicating compliance efforts.

Throughout that process, we have seen hospitals try different compliance routes, each of which has pros and cons. For example, because the 2015 IPPS Final Rule specifically mentions posting the full chargemaster online, this appears to be the most direct route to compliance. As many have found though, this can result in an unwieldy patient resource that is hard to navigate and that can leave users with incomplete information and unanswered questions.

Another option is to post median gross charges online, which gives a rolling average of actual cost and it might be a bit more exact than Chargemaster prices. But because many factors affect patients’ costs as gross charges are converted into actual out-of-pocket responsibilities, this can still result in patients having incomplete information. A third option is to select the highest volume of outpatient services and inpatients DRGs and to offer charges online for only those options.

This can result in a narrower list that is easier for users to navigate. Because the most common services and DRGs will be included, it's likely that many patients would find what they're looking for, though not all. And because some patients will be looking for services or DRGs that are not in the selected group, price transparency would still be limited.

Many hospitals have started offering a hotline that patients can call or a form online that they can use to request a price estimate. This approach can be beneficial because it's easy for patients and they will receive a response tailored to their insurance benefits or lack thereof, and their expected services.

However, patients must wait for staff to contact them to share the estimate once it is ready. And if patients didn't submit complete or accurate information when they requested the estimate, the process can be delayed. Responding to the growing trend of patient self-service, in which patients are expressing a desire for the ability to perform many revenue cycle tasks on their own, such as scheduling an appointment or setting up a payment plan, some hospitals are offering an online estimator tool. Patients can use these tools to quickly and easily receive an estimate without staff intervention. The accuracy of this approach can be affected if patients do not understand their insurance benefits or do not have correct information to plug into a calculator.

Finally, the easiest option for patients might be to proactively mail them estimates without waiting for a request. It’s easy to see, though, why that would be burdensome for revenue cycle staff and potentially an inefficient use of limited resources.

Because of the pros and cons of all these strategies, some providers have decided to implement more than one approach to price transparency. For example, at MetroHealth, many insured patients can use an online self-service tool to generate their own estimates. But all patients also can request a detailed staff prepared price estimate, too, in addition to other price strategy / transparency initiatives. MetroHealth also is currently dealing with a price transparency law scheduled to go into effect at the beginning of 2017, which means they are working to adapt as we speak.

Pros and Cons Visual Comparison Chart

Visiual Comparison Chart of Pros & Cons for Healthcare Price Transparency Strategies 1Visiual Comparison Chart of Pros & Cons for Healthcare Price Transparency Strategies 2