Be Proactive: Prepare Today for Upcoming Price Transparency Mandates

By Kyle Sherseth, Senior Manager, Advisory Services | Posted: 07/02/2019

nThrive Price Transparency Health Information Technology Solutions

While the recent executive order on health care price transparency, signed by President Trump on June 24, did not result in immediate changes for health care providers, it certainly should serve as a wake-up call. The administration made its intent known that more broad-sweeping mandates are potentially on the way in very short order – calling for draft price transparency policies by Health and Human Services (HHS) within 60-180 days.

It is anybody’s guess whether HHS and the health care industry at large will be able to meet this blisteringly fast schedule or how long it will take new regulations to truly go into effect. However, the message to health care organizations should be perfectly clear: be proactive today, putting in the health information technology and revenue cycle management expertise to comply with much deeper price transparency mandates before the end of the year.

Breaking down the spirit of the order

Looking back on the initial January 1 ruling by the Centers for Medicare and Medicaid Services (CMS), which required hospitals to post their Charge Description Master (CDM) data online, this was just a first step. Both the administration and health care industry quickly acknowledged it was not a silver bullet for price transparency, especially since prices pulled from the chargemaster rarely reflect true out-of-pocket patient costs. With insurance and self-pay discounts, patients almost never pay list price.

In this sense, the spirit of the executive order is all about giving patients better information on what they are going to pay, ultimately improving overall patient satisfaction. However, it does beg the question on whether hospitals will be required to post their negotiated rates with payors, essentially inferring, “Hospitals, you must not only post your charges but also the amount you are going to get paid by the insurer.” If this proves to be true, it will be a big industry change, as negotiated rates have typically been considered proprietary. Giving competing hospitals access to contracts will likely cause a flurry of renegotiating that could well drive health care prices up – not down.

Ultimately, the answer is that hospitals should move toward providing patient estimates that truly reflect the cost of care and making this information easy to obtain, whether by logging onto a website or making a call. Hospitals that use a patient estimating tool can significantly increase price transparency for patients and make it easy for them to shop for health solutions.

Getting to the ‘silver bullet’ solution

What should hospitals implement to create an integrated price transparency solution that truly serves the best interest of patients? To get to the answer, let’s back up and ask some fundamental questions. First, are the prices you are putting on your products and services defensible? Can you say that your prices are based on cost and align with your market? This cuts to the core of strategic pricing and benchmarking, analyzing market competitors to develop a strategy for pricing you can defend.

Along with pricing strategy, can you defend your charging practices and structure? This plays to your charge capture audit process, ensuring that you accurately reflect services provided and include them on claims. Doing a compliance audit on your Charge Description Master can help ensure that you are accurately reflecting CPT codes and other information required to comply with Medicare guidelines.

Contract management technology is another essential tool to add to the health information technology stack if hospitals are required to release their negotiated rates with insurance providers. This allows providers to organize rates and easily pull data to post online. It is also integral for accurate cost estimates, as tools such as nThrive Carepricer and Carepricer Payment Estimator, which enables online, self-serve estimating, pulling from contract management information to calculate out-of-pocket patient costs.

Going beyond price transparency

Ultimately, transparency is all about making it easier for patients to make informed health care decisions, which goes beyond financial considerations. In this spirit, the executive order also outlines the need to increase patient access to quality information. If, for instance, Hospital A has better results on knee replacements than hospital B, patients evaluating knee replacement options should have access to this information as part of choosing a provider.

The stage has been set for health care organizations to better report – and compete – on quality scores through legislation such as the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which leverages analytics to evaluate and report provider quality scores.

How patients pay is also reflected in the executive order with respect to high deductible health plans (HDHPs) and specifically calling for changes to flexible spending accounts to allow patients to roll over more money at the end of each year. Providing patients more payment options will also likely be a consideration.

Better patient advocacy

In its full interpretation, it can be said that the recent executive order is truly a patient advocacy order overall. How do we make the health care system more transparent and easier to understand for patients? How can we help patients make care decisions based on data versus gut feeling?

While some may resist the coming price transparency changes, only seeing dollar signs related to required investments, I’d like to suggest that this is really the cost of better serving patients, which better serves health care providers as well. A better-informed patient is proven to be a better payer, which translates to capturing more dollars for provided care – improving overall revenue cycle success and generating a quality improvement in healthcare.

Leveraging the latest technology to improve price transparency also greatly increases operational efficiency, returning more dollars to the bottom line. Think about the price of reworking claims that don’t meet compliance standards. Or, the cost of being called out, either by the media or regulators, for not having a tight pricing structure. Then there are the labor hours that go into pulling cost information from PDFs or Excel documents, which could greatly be offset by using contract management and estimating technology.

Are you ready to take pro-active steps to address increasing transparency requirements? At nThrive we can help your health care organization prepare for tomorrow’s rulings today, addressing everything from defensible pricing strategies, to better contract management and estimating capabilities, to quality reporting and more. Watch our nThrive video for more information on the impact of the June 24 executive order. To speak with an nThrive expert today, call us at 678-323-2500.

Are you ready for price transparency changes?

Kyle Sherseth explains the recent executive order on health care transparency and what it means for U.S. health care organizations. Watch here.