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What Healthcare Providers Need to Know About New Price Transparency Requirements

What Healthcare Providers Need to Know About New Price Transparency Requirements

Back in 2014, John Toussaint, MD, CEO of ThedaCareCenter for Healthcare Value told Becker’s Hospital Review that “There’s more price transparency and quality transparency regarding a refrigerator than there is about your heart surgery.” Fast forward to 2020 and his statement still holds true, despite a 2019 Executive Order aimed at improving price transparency and enabling “patients to become active consumers so that they can lead the drive towards value.” 

The reason? The first implementation of the order only required hospitals to post a machine-readable chargemaster list on their websites — not a particularly user-friendly format. Such lists are full of indecipherable descriptions, abbreviations and acronyms and may contain tens of thousands of items.

“Honestly,” says Shawn Gremminger, senior director of federal relations at Families USA, “it doesn't do a whole lot. It doesn't necessarily tell consumers anything that is really helpful in terms of making decisions.” For consumers, it’s the equivalent of figuring out what a car would cost from a list of every raw material, nut and bolt, and hour of labor that goes into making hundreds of different vehicles. 

What’s more, the list prices shown don’t accurately reflect the actual prices paid because it depends on the insurance status of patients. Medicare, Medicaid and VA healthcare costs are capped by law, while insurers pay negotiated rates. And hospitals may offer some patients discounts based on income or pre-payment for services. 

Upping the Ante for Price Transparency

Some hospitals recognized the challenges of posting chargemaster lists, opting instead for more innovative approaches. The University of Utah Health System, for example, established an online price comparison tool for 70 of the most common procedures, backed by a call center that helps patients better understand what the cost of care will be based on their insurance and circumstances. But consumer-friendly options are the exception, not the rule. 

As a result, late in 2019 the Trump Administration announced changes to the price transparency regulations. In a written statement, CMS Administrator Seema Verma said, “Under the status quo, healthcare prices are about as clear as mud to patients. Today’s rules usher in a new era that upends the status quo to empower patients and put them first.”

What do the new rules require?

  • Provide a complete view of cost variances for a more ‘shoppable’ consumer experience. The digital file must include all standard charges for items and services — not just the chargemaster list prices. This includes cash discounts and payer-specific negotiated rates for 70 CMS-specified services, as well as 230 hospital-selected services. In addition, hospitals will be required to list de-identified minimum and maximum negotiated rates. 
  • Make price transparency information easier to interpret. Codes must be included, but hospitals must also add a description of each item or service rather than relying solely on the indecipherable alphabet soup so common in chargemaster lists.   
  • Provide barrier-free access to the data. That includes ensuring the data is free, without the need to register for access, and enabling users to search the list by service description, billing code and payer. 

Health insurance providers aren’t exempt from new price transparency requirements either. They will need to provide online tools for patients to research expected out-of-pocket costs — and reduce the likelihood of unanticipated coverage surprises.

While these rules don’t go into effect until 2021, hospitals and payers need to start preparing now. And medical practices and urgent care centers should get on the price transparency bus to build patient loyalty. After all, retail giants already understand that consumers want to know the cost and quality of what they’re buying — and companies like Amazon, Wal-Mart and Walgreens are poised to disrupt the industry with innovative approaches to healthcare delivery. 

Transparency Could Boost Patient Payments

The new rules have given rise to quite a bit of debate. Some say it places an undue burden on healthcare providers because of unpredictability. A patient’s age, health status and other differentiating factors mean that the same procedure may require different approaches that will lead to natural cost variations. However, price transparency could have a positive impact on patient financial responsibility

When patients feel like they’ve been blindsided, with higher-than-expected hospital bills or out-of-pocket costs, they may struggle with patient payments. It’s not that they don’t want to pay. As the saying goes, “forewarned is forearmed.” Understanding the potential costs of a medical procedure before it takes place enables patients to budget more effectively. But price transparency is not the only way to improve patient payments. 

Patient engagement technologies like PatientBond can help hospitals, medical practices and urgent care centers boost collections by identifying how patients approach their healthcare experiences through psychographic segmentation. What motivates a particular healthcare consumer? Which method of billing notification is preferred? How does the patient want to make payments? Based on the 2018 PatientBond Consumer Diagnostic, we know that Self Achievers prefer a live phone call, whereas Balance Seekers, Priority Jugglers and Direction Takers prefer notifications by mail. And all but Willful Endurers like email notifications. 

Having these insights from psychographic segmentation also enables healthcare providers to fine-tune their messages to align with patients’ attitudes about health and wellness, which can spur them to act — whether its motivating behavior change to address a medical condition or encouraging timely patient payments. Price transparency may still be a moving target, but building patient trust and engagement through consistent, relevant communications can help hospitals, medical practices and urgent care centers keep their collections on track. 

For more patient payment insights, download our case study

Using Digital Engagement and Automated Reminders to Maximize Patient Payment Collections



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