VitalWare: Creating a Transparency Strategy: Meeting the Mandate to Post Standard Hospital Pricing

In this business profile, Kerry Martin, CEO of VitalWare, discusses strategies for creating comprehensive pricing transparency for consumers while protecting providers.

With the 2019 IPPS Final Rule published and the OPPS Proposed Rule in its review stage, close to publishing, what advice would you offer healthcare leaders looking to best set themselves up for compliance and success in 2019?

In my opinion, top of mind consideration needs to go to the mandate in both the IPPS Final Rule and the OPPS Proposed Rule that standard hospital charges be posted online. Organizations in California have had to comply with this legislation for years, many of them taking the approach of merely posting their chargemasters. Without a doubt, this tactic has caused consumer confusion and development of a more comprehensive pricing transparency strategy will help set the stage for hospital compliance and consumer ease of use.

It’s not just a mandate. Individuals are becoming more financially accountable for their health care, and they want to understand the costs involved, which affords them the opportunity to make better-informed decisions regarding treatment.

What things should providers consider when developing a pricing transparency strategy?

As hospitals and health systems begin to create their strategies, they should consult with their peers to generate consensus about which elements should be included online. Consider the chargemaster description, the revenue code, the price, or a combination of the three. Perhaps including CPT codes is appropriate, as these make it easier to compare one hospital to the next. Another component to weigh in on is whether to post different prices for patients with chronic conditions.

Providing this level of transparency is easier said than done because every patient is different, and so is every procedure. Whether it’s the surgeon performing the procedure, the supplies and drugs he or she chooses to use, or the patient’s chronic conditions, there are a lot of variables. Some physicians take longer to complete a procedure, but their outcomes are better. Other physicians take less time, but their outcomes are decent and thus may be more cost effective. When surgery suite charges accrue by the 15-minute, 20-minute or 30-minute blocks, those seemingly small differences can add up to real money.

Equipment is another area of variability. There can be a $1,000-dollar range just in the types of screws used in a total knee replacement. You’ve got all these variables at play that result in surgery for one patient costing $22,000 and $34,000 for another. Although these discrepancies are less critical for insurance companies because the health system has negotiated rates as part of contracting, these nuances become exceedingly important to patients who are paying the cost themselves.

There is a lot of confusion around the meaning of different costs, and without a strong communication strategy about these costs, patients may not understand what they’re looking at and may not fully appreciate why the price distinctions are there. This confusion can lead to misperceptions that can cause patients to seek healthcare elsewhere, where they perceive things to be more cost effective. Consumers need to receive more than just pricing information; they need to understand what factors influence that price. For example, if they choose a different doctor who is not as experienced, will that affect the price? Is the cost difference worth the risk?

How can providers work together to ensure comprehensive pricing transparency for consumers?

As healthcare providers, hospitals and health systems need to go beyond merely sharing cost information. They need to also provide context for that information, so patients can make the best decisions for their personal needs. At VitalWare, our goal is to help hospitals better communicate their pricing to both promote transparency and provide context.

VitalWare is helping hospitals create and refine their strategies. We are developing and will be launching a website called hospitalpriceindex.com where we will list the 200 most-performed procedures. Consumers will be able look up an organization’s prices as compared to the state average. The website will offer the ranges of prices and the conditions that would influence those ranges, such as chronic conditions. It is designed to be a useful tool for both patients and providers to increase transparency and provide context.

How would you suggest hospitals navigate through the ever-changing ‘environment to drive positive financial outcomes?

Another recommendation I would offer hospitals and health systems is to consolidate vendors where possible. VitalWare is unique in that it addresses the middle of the insurance form in its entirety. Although there are different vendors for chargemaster optimization, coding, medical necessity, and so on, it can be beneficial to leverage one partner that supports all aspects of the billing form. By working with a single vendor, like VitalWare, organizations can be confident that their claims are as correct and compliant as possible—and that reimbursement will be swift and comprehensive.

To truly “change the game” around financial performance, healthcare organizations must be aware of and prepared to handle several evolving dynamics. The first is emerging payment models that place a greater emphasis on proactive care and chronic disease management, with payers rewarding providers for quality and cost outcomes instead of the number of procedures they perform. To effectively respond to this dynamic, organizations need to reframe how they approach and document patient care to make sure they completely capture the care episode and optimize payment.

Amid this change, some health systems are still recovering from their electronic health record (EHR) implementations and may be looking to upgrade to more robust solutions that better support new payment models. There has been a big push to implement large-scale, integrated systems, however hospitals and health systems may not fully realize the volume of resources necessary to maintain those systems and get meaningful use out of them.

And let’s not forget ICD-10. It has been 36 months since the code set went live, and insurance companies are starting to draw a line in the sand about specificity. Soon they may not accept unspecified diagnosis codes, which means providers must ramp up their documentation or risk not getting paid for services.

How do your products help hospitals and health systems start to change the game?

VitalWare is focused on ensuring healthcare organizations accurately and completely capture information about the patient care episode. We also help provide greater transparency to patients around prices and costs.

In 2011, we began in the ICD-10 business. Since then, we’ve built an extensive vocabulary that lets physicians fully capture the locations and severities of an illness or condition and what the potential causes are. We built this vocabulary tool and embedded it into Vital365, our encoder product with a clinical documentation improvement component. This solution helps organizations change the game in terms of their documentation, meeting the requirements of insurance companies and avoiding denials due to lack of specificity, insufficient medical necessity justification, or general errors.

Another tool we offer is our chargemaster maintenance solution, which is designed to handle the size and scope of the largest integrated EHRs, which have extremely broad and complex chargemasters. Our solution can load the native file from these larger systems and analyze and manage it as a single line item. We are able to do this because we have leveraged more modern technology—Microsoft SQL—to address the needs of the newest patient accounting systems.

In addition to ensuring comprehensive and clean claims, our chargemaster tool assists with price transparency for patients. Starting in 2019, the Centers for Medicare & Medicaid Services (CMS) will require healthcare organizations to post their charges online in the interest of promoting transparency. By using VitalCDM, organizations can be confident in their prices for supplies, equipment, and so on and be certain they are not way out of bounds compared to similar hospitals in their area.

Are there any materials you would like to share?

For more information about VitalWare, including case studies and testimonials, go to www.vitalware.com.

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About VitalWare

VitalWare is the leading mid-revenue cycle SaaS solutions provider, specializing in Health-IT applications aimed at making the business of healthcare easier through its intuitive cloud-based technologies and regulatory content expertise. With more than 675 hospitals on its client roster, VitalWare’s product portfolio is the healthcare industry’s best solution for providing visibility and continuity in Chargemaster management, documentation, charge capture, and regulatory code references. Beyond providing tools and healthcare regulatory and compliance resources, VitalWare offers professional services designed to support organizations’ needs of coding guidance, process improvement, education and financial impact solutions. Visit our website, www.vitalware.com