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Industry Insights

Price Transparency and Consumerism

Part Two - Consumerism Today in Healthcare 


Previous: One - Increased Price Transparency

Next: Three - What You Want to Accomplish

Transcribed Video Content Below

So let's move from what we are being required to do and spend a few minutes reviewing where our society is as it relates to pricing expectations. As I just mentioned, states are moving to mandate an estimate for what a patient's health care costs will be, but what cost should be used is a real question? How do we best present and communicate that cost, as well as how do we engage our customers with this information or additional critical questions? Enrique, I believe we have our first poll question.

Enrique: Yes, that is correct. Thank you, Greg. The first poll question is:

Q1: How do you engage patients with financial estimates today? Please, select all that apply, the options are online, call in, at pre-registration, or at time of service. Again, that question is, how do you engage patients with financial estimates today? The answers are online, call-in, at pre-registration or at time of service. This poll question will be open for the next few minutes, and then we will present the results at the beginning of the next poll question.

Greg: Thanks, Enrique. As everyone's completing their response to the first poll question, it's noted here on the slide, there are two common questions that patients have when confronting a health care issue. Within our world that being the revenue cycle area of responsibility, we know we can't address the first question, but we can help clarify the second question. Which often leads to a multitude of follow-up question such as what's my out-of-pocket? Will my procedure be covered? I had insurance and thought this was covered.

These questions become even more relevant when we take into account that 57% of buyers purchasing decisions happen online prior to their first contact with office health care providers. Think about how you shop today. We all research the price of something before we actually walk in a store or contact the seller. In fact, studies show that 55% of Americans seek out the cost of a procedure before they actually schedule an appointment for a service.

When most hospitals implemented their patient estimation system several years back, the goal at that time was to provide a more accurate patient estimate that more accurately calculated be allowable, and in turn, the patient coinsurance amount. Health care services as we know are extremely expensive and are often provided on an outpatient basis these days. Patients are more likely to also be covered by insurance with a high deductible health plan. Most hospitals today have eligibility and point to service collection processes in place, and would at a minimum, check and collect the $50 copay.

With the example we see on screen, we know that an estimation system helps address the mis-patient communication and collection opportunity which is really the patient coinsurance portion. This component is often the largest portion and many times the least understood, and it's less likely to be discussed during that upfront pre-registration process. Various industry studies have consistently shown if you let the patient know how much they're going to owe in a clear and concise manager, the majority will have the ability and willingness to pay.

The noted stat as it relates to patient collection reality is from a McKinsey study that highlights this point, that nine out of 10 patients are both willing and capable of paying their financial responsibility up to $500 per year, and nearly 75% are capable and willing to pay up to $1,000 in health care expenses. Many of you on the call today have implemented a cost estimation system to improve the patient estimation dialogue and a point of service collection. But as we know, the only constant in life is change. As we started today's session, we noted that many states are rolling out state-specific websites for patient estimates, most payers have deployed estimation systems as well.

The reason that you are, the health care provider, wanting to incorporate the deployment of a patient estimation system should be to take control of the pricing message dialogue. If we're going to take control of that price message, and that dialogue we first need to revisit what our customers, the patient, expects today. It's important to recognize the shift with online use, messaging and the means for that messaging is critical. Brad, why is this important?

Brad: Yeah, Greg, it's important for a number of reasons, and the first is that the first statistic you see on the slide there, that our attention span online continues to shrink. The average attention span is now just eight seconds. That's how long you now have to capture the attention of your customers or in your case your patients. The tech giants like Google, Facebook, and Amazon, have really led the way in kind of transforming this patient and user experience. And as a result, we're seeing now three or four individuals also get frustrated when content appears to have nothing to do with their interest.

Another interesting statistic is that a Google search is now becoming the first step in the buying process with consumers being halfway through that process before they actually engage with someone. And finally, another statistic that's relevant to our conversation today is that 47% now expect personalized service. Not just that they prefer it or they would like personalized service, it's now an expectation, and we really have to take that into account when we're engaging with our patients online. So the bottom line is that people want information readily available so that they can make a well-informed decision.

Greg: So let's take a step back and apply this to a real-life example to what cost really means, and the impact if healthcare providers don't take control of the price message. In other words, leaving it to the state to publish or the federal government to publish your price. As we've previously noted in the collection example, a typical patient has a high deductible health plan with basic coverage. In this example, it's a $50 copay with a 20% coinsurance, a $2,500 deductible, and a 1,300 remaining out of pocket. A few years ago that individual would have no idea with what most of this meant, but we know they were willing to pay what you asked based upon a reasonable expectation.

Several years ago, McKinsey found approximately 75% of people willing and able to pay up to $1,000 in health care expenses. But today, as Brad mentioned, people are going online and shopping. And here's an example from an NPR show that noted what one individual happened to find last year. One location had a price of $286, and another location had a price of $8,897. Now the public would probably wonder how in the world could this be, is this for real? Well, we work in the health care revenue cycle space and we know this can be accurate.

The pricing reality is, for the first site, it lists just the patient financial responsibility. From a hypothetical calculation, this example would have been based on a $2,300 charge with a $1,186 insurance allowable, and with the patient having a 20% coinsurance and a $50 copay. The pricing reality for the second site, which would be similar to anyone on the call today potentially having is that this item could have an $8,000 charge, but with a payer allowable of $ 1,650, the difference being the contractual adjustment. The $50 copay and with the 20% coinsurance, the patient responsibility would actually be closer to $380.

The key for hospitals is to start to change this narrative and meet the patient... well I mean the consumer, online as they're researching and shopping. There will be differences in charges, and there will be differences in the patient responsibility from one healthcare provider site to another, but the challenge that we have to rise to is to move to a more accurate number and that being the patient actual cost, not the charge, not the copay, but their actual cost being their financial responsibility.

So the National Institute of Health determines the best way to improve the patient care experience in terms of increased care, reducing costs, and improve the health of our overall population, was through the family nucleus. So when we combine the pricing reality with the digitization of everything, we have to recognize that people today want something a little different. They still want to know they're going to get better, but they also want to know how much is it going to cost them, they also want to know is this a good deal. You know, who doesn't want a good deal today? And people and families also want to do all of this without a hassle. Remember 60 plus percent want a digital option as Brad mentioned, and will search online before they look at actually scheduling an appointment. So today, hospitals have to move to embrace improvements to their website and provide the ability to generate an estimate online. So what does that mean? Well first, it has to be easy to find.

Brad: And it has to be easy to use, and let's keep in mind that eight-second rule before the user moves on. So your patient estimation web page should really provide a means for remembering the patient, whether that's a simple Remember Me box that they can check to autofill their demographic information. And remember, it has to be easy. If it's a hassle they'll simply go somewhere else.

Greg: Right you are Brad, people do get frustrated and they move on very quickly these days. Which means that it also has to be very accurate, and for an accurate patient estimate, your estimation system and your estimation processes has to accurately manage four key elements. The right location, the right insurance, the right procedure, and the right benefit. It's our responsibility to do this so that it is easy for the general public to do the right thing, which is to schedule their procedure at your hospital. Enrique, I believe we have another poll question.

Enrique: Yes, indeed and we will also pause for our first scheduled Q&A break.

Poll Results

For that, we will share the results of our first poll. As a reminder, that question was:

Q1: How do you engage patients with financial estimates today?

A1: The results:

92%, said via calling in;
76%, said at pre-registration;
59%, said at the time of service,;
and 32%, said online;

And with that, we'll launch our second poll.

Q2: Please describe how you are currently providing pricing information on your hospital's website?

A2: Provide full personalized estimates online, provide some pricing information online but not personalized estimates, we don't provide any pricing information or estimates online, or I don't know.

Again, that second question was please describe how you are currently providing pricing information on your hospital's website.

And what that, we'll begin the Q&A and this will also go for Barb if you have any insight on these questions, by all means, please feel free to contribute. First question is:

Q&A Session

Q1: How do we prevent patients who shop around from going outside our health system for care if we are not the cheapest option?

A1: Brad: I think it comes back to controlling the pricing message. You want to be able to move to having the discussion around both quality, convenience, and outcomes. And try to keep pricing at a minimum. Some organizations are closely monitoring what services are typically shopped online, and in those cases, you're trying to identify the things that may be viewed as more commodity services to be price competitive. But again, you want to control the price message. You don't always have to be equal to or less than the area competition, but you want to be in the same range, you want to make sure that you are least providing the same consistent information. And that being, the patients cost, not your charge, not the payroll allowable, but what it's going to cost the patient so that you can again focus on quality, convenience, and outcomes

Barb: It might also be helpful if you are able to try to highlight the benefits of your particular organization, your radiologist, etc., to differentiate yourself from the corner imaging store that might be inexpensive, but do not have the quality of the leaders of the information, or the procedure, or your surgeon, or whatever the particular procedure is.

Enrique: Thank you very much. Here's a question from Franco…

Q2: With CMS mandating that prices are posted how will this impact drugs administer? How accurately does the pricing information have to be because these will vary by patient?

A2: Greg: Yeah, great question and I think there's still more to come from CMS with what exactly they're going to be looking for. What has been published thus far is that there will be a requirement for a list of prices, and that list hasn't been fully defined yet. And certainly, pharmacy items, outpatient items, especially things like very expensive drugs around oncology will be one of those critical pieces that will have to get addressed in the coming days.

Enrique: Very good.

Q3: Another question from the Q&A. Does an online estimator satisfy the 2019 federal requirement for listing standard prices?

A3: Greg: Possibly. It depends on what services you're listing on your website, and how complete and inclusive of services you've elected to put out there in the marketplace.

Enrique: Very good. Another one here…

Q4: How can we involve clinicians in cost estimation? Many patients, as you know, simply go wherever their physician refers them, so the engagement question is actually pretty interesting. What are your views on that?

Greg: Enrique, could you repeat the question.

Enrique: Sure, how do we involve clinicians and/or physicians in cost... excuse, me in cost estimation particularly in view of the fact that many patients simply go wherever their physician will refer them?

A4: Brad: Yeah, that needs to be an educational collaborative effort that should be led by the hospital. And a lot of your services are going to be referrals from the individual physician offices or clinics, especially those that aren't affiliated or owned by your organization, so it should an education process. And as you're moving to be more transparent with your pricing you should be reaching out and having those discussions. You should also be constantly reviewing and analyzing, so you understand what procedures from a top 10, top 20, top 50 procedure list, are you receiving those referrals from those particular offices. And being prepared to have that pricing discussion with those providers. The clinician should definitely be involved and incorporated into this process.

Enrique: Very good. Let's take one more here and then we'll... as a reminder to the audience, we do have two more Q&A breaks coming up. One question here from Beverly,

Q5: What exactly is standard prices? Will we need to include the entire charge description master including CPTs to satisfy CMS requirements in 2019?"

A5: Greg: Yeah, our understanding and what we reviewed thus far, standard prices have not been defined. There is one school of thought that it will be the charge description master, but as we know from a health care service and a billing standpoint and tying it back to estimates, charge code roll up into more of an episodic service. And if we're going to meet the patient where they are, we're going to have to, as an industry, think through and ensure that while we may be required to post our charges or a list of prices, the marketplace wants something that is both easy to find. And reviewing a list of 1,000 plus charge codes probably isn't going to be what they consider to be easy to find. So it has to be easy to use.

And that's where a website tool that allows patients to shop, and converts that billing information up to a service level, and incorporate the benefit data for that particular patient is what's needed for our industry to really be able to respond to patients, to consumers with what their cost is going to be. That's really what the estimate process is all about, we may be required to do one thing from a regulatory standpoint, and I think we need to be looking at and thinking further out beyond the horizon with what patients and consumers are really looking for.

Enrique: And before we move on, Barb, do you have anything to add?

Barb: No, I think Greg explained it very nicely, the only thing is to make sure that the website is, as Greg said, easy to use, easy to access, and very clear.