Q&A: Do Price Transparency Regulations Improve the Patient Experience?

Leaders with two health systems explain why their organizations are placing more emphasis on patient education and customer service than on new regulations surrounding charge transparency.

Healthcare price transparency regulations call for providers to share standard charges as part of efforts to improve the patient financial experience. For instance, the Centers for Medicare & Medicaid Services (CMS) recently adjusted its annual Inpatient Prospective Payment System rule to require hospitals to provide information about standard charges on their websites.

As stakeholders including HFMA have noted, posting charges on hospital websites may not be enough to fully inform patients. Price negotiations between providers, health plans, and vendors are complex and can render the providers’ lists of charges almost irrelevant from a patient perspective.

Exploring negotiations between stakeholders, a 2013 research paper by the University of Chicago Booth School of Business, “The Only Prescription is Transparency: The Effect of Charge-Price-Transparency Regulation on Healthcare Prices,” notes that when hospitals demonstrate lower prices, what patients pay may not be impacted. Discussing the disconnect between transparency regulations and any changes in patient bills, the paper highlights multiple factors that affect the billing process.

While meeting the requirements of the regulation, some providers are taking additional steps to translate price transparency into an improved patient experience. In this Q&A, two finance leaders weigh in on the new transparency regulation and ways to enhance the patient experience through education and an emphasis on high-quality customer service:

Lori Peck (pictured at top right), vice president of revenue cycle, Aspirus, a health system based in Wausau, Wis., that includes four hospitals in Michigan and four hospitals in Wisconsin, 50 clinics, home health and hospice care, pharmacies, critical care and helicopter transport, medical goods, skilled nursing facilities, and affiliated physicians.

Karen Testman (pictured at bottom right), CFO, MemorialCare, a Southern California health system with over 200 care locations including four hospitals, physician groups, a health plan, and numerous outpatient surgery, imaging, dialysis, and breast health centers, plus a combination of physician clinic and office locations and urgent care sites in Los Angeles and Orange counties.

Has recent charge/price transparency regulation impacted your hospital’s prices for patients?

Peck: This regulation is a nice first step to provide more information but doesn’t seem to have significant meaning for the consumer. I think providing out-of-pocket cost information would affect consumer behavior in making healthcare choices more than impacting the setting of gross fees. 

Our focus is on complying with the regulation and placing our energy in areas where we can provide patients with meaningful information about healthcare costs. 

Testman: In California we have been required to post our chargemaster online and submit it to the state for a number of years, and so the recent changes were not a significant change for us. 

Providing out-of-pocket cost information has not had an effect on pricing. We aim to be market-competitive with respect to our chargemaster pricing and consistent with our goal of being the leading value provider in our market.

Have you noted changes in your patients’ behavior, such as more price-shopping, as a result of transparency initiatives?

Peck: I don’t think patients have been affected. We did a full training with our financial care center covering potential questions resulting from the CMS rule and the posting of charges, but the center has not received patient inquiries resulting from this change.

Testman: We have noticed our patients are becoming much more aware and savvy about hospital and other medical-service costs, particularly their own share of cost—not necessarily related to pricing transparency, but to the apps, websites, and other services that make it easier for patients to price-shop and compare costs among providers. 

In addition, health plans are steering patients to lower-cost options and providing their members with a more robust share of cost information.

What are the implications of the ability of hospitals to decouple charges from payments as discussed in the Chicago Booth study?

Peck: We have PPS and CAH hospitals, which are paid under different methodologies. When you get down into the details, if we changed our fees, it would change payment at some of our hospitals but not at others. Multiple factors go into the charge amount and how much patients pay.

Testman: Rates that are negotiated or mandated for network participation fall below our list prices, which can create confusion. Publishing chargemaster data and adjustments to chargemaster charges have little to do with what a patient pays for services.

Would regulations such as the CMS rule that took effect Jan. 1 partially account for discounted, negotiated rates for medical procedures?

Peck:Going from gross fees to what the payer pays, there’s such as a chasm of complexities that I can see if a health system reduces a fee, a consumer may not understand whether that translates down to them. Because rules and requirements from payers are not standard, chargemasters are complex, requiring multiple different charges [for providers to be able] to send a claim to be paid correctly. I think that hospitals desire a simpler chargemaster overall, but its current design makes that difficult.

Testman: I do not believe it will have any significant impact, as the average charge by DRG is based on our charges and not our negotiated or mandated rates. What it can do is provide the patient a sense of the relative prices of procedures to one another.

How can transparency regulations improve the patient experience?

Peck: To help manage expectations for patients looking at the list of charges, we’ve added a statement to our website with language explaining that multiple factors determine the patient bills from the charges. Before accessing the files, patients must indicate they understand this statement. Our next steps involve establishing a single point of contact to provide patients with customized out-of-pocket estimates, which would also be available on our self-service portal.  

Though we’re complying with the regulation, we’re more focused on patient education and longitudinal population health, making patients healthier and managing cost of care by reducing utilization.

Testman: We have taken several steps to help our patients better understand our chargemaster, their share of cost, and the options available to them.

These steps include language with the charge list that cautions patients about the complexity and nuances of the chargemaster, an online guide to understanding healthcare prices, an online cash-pricing tool that helps estimate cost of care for given procedures, patient statements that are easier to understand, and a concierge program that answers patients’ questions about their share of cost throughout their experience. 

We confirm the effectiveness of these measures by inviting patient feedback regularly, noting positive feedback and improvement in upfront collections from patients in our concierge program.

Interviewed for this article: Lori Peck, vice president of revenue cycle, Aspirus, Wausau, Wis.; Karen Testman, CFO, MemorialCare, Fountain Valley, Calif.