One health system is moving toward an Amazon-like experience that combines out-of-pocket cost estimates with quality and experience data.
Feb. 1—Publicity has surged around the new federal requirement for hospitals to post charges online. But some hospitals have managed to exceed that mandate in ways that provide more effective price transparency.
OSF HealthCare, a not-for-profit Catholic health system in Illinois and Michigan, ensured it met the mandate from the Centers for Medicare & Medicaid Services (CMS) that hospitals post their charges online in a machine-readable format starting Jan. 1. But its leaders worried the new data—along with the media attention surrounding the requirement—wouldn’t be helpful to patients.
They realized “there is a more important message beyond just the transparency itself,” said Michelle Carrothers, vice president, strategic reimbursement for OSF HealthCare. “Obviously, that gets the conversation going and that’s very important, but it’s really about helping to identify out-of-pocket expenses from their end and what they would owe for any type of procedure.”
To that end, OSF HealthCare launched an online form to provide—within a day—out-of-pocket price estimates to patients for specific procedures (described by procedure name or CPT code). The estimates are tailored to the contracted rates of patients’ insurance plans and based on patients’ benefits information.
But the organization’s focus has been on getting patients to call in so its business office can help them work through complex healthcare finance jargon and get the most helpful information.
“Health care is complex, and people have a hard time understanding what their benefits are, so we like to work with them to understand that,” Carrothers said in an interview
UCHealth, a not-for-profit system of 10 acute-care hospitals in Colorado, Wyoming, and Nebraska, also aimed to go beyond posting its hospitals’ chargemasters online.
“About a year ago, we talked about how just posting the chargemaster on our website, which is essentially the requirement, is really not good enough; it’s confusing at best, it’s not patient-specific, and it’s very generalized,” said Steve Hess, CIO at UCHealth.
In response, the system coordinated with a financial-counselor call center to provide patients with out-of-pocket cost estimates in advance of elective care, based on their insurance. Then, they created online versions of the estimator on their website, patient portal, and mobile app.
“The idea is the patient can not only call somebody and talk through what the projected cost would be—not some generic chargemaster charge, but ‘What will it cost me to do it at this hospital with my insurance plan,’” Hess said in an interview. “It’s taking the idea from publishing charges, which isn’t that helpful to a patient, to ‘What does this mean to me?’”
The estimator is providing about 100 estimates each month, but the volume has increased as the health system adds procedures for which it provides estimated costs. The initial set of 30 procedures has grown to about 200, and more will be added.
Dan Clarin, senior vice president at Kaufman Hall, which advises hospitals on the issue, said meeting the latest CMS charge transparency requirement was not a technical challenge for hospitals.
Other industry officials have noted some confusion over what payer charges CMS was requiring to be posted—since not all payers use diagnosis-related group (DRG) codes—and whether provider-based physician charges were required.
For its part, OSF Healthcare opted to post the common charges it uses for all payers, and its full chargemaster includes charges for physician components, pharmaceutical, and lab.
Kaufman Hall was among those encouraging hospitals to move beyond the latest CMS requirement and to modernize their strategy by focusing on pricing—or their total payment from payers and patients.
Clarin urges “viewing that as not only a defensive initiative—defending against market forces that may be putting pressure on their pricing approach—but also recognizing it as critical to growth in the future.”
In practice, that would mean assessing how an organization’s prices compare to those of other providers for various services. That might mean raising their prices for services (such as heart surgery) that they perform best among local providers, while lowering prices for other services (such as basic imaging) that many provide locally.
“While it may not be a perfect solution for consumers, putting providers in the position where they need to answer those types of questions about, ‘Why are your prices this way’ just adds fuel to the fire of providers needing to have that rational, market-based pricing, so they have a better explanation when that question is asked,” Clarin said in an interview.
Future Directions
Hess views UCHealth’s newest price transparency tools as part of its overall consumerism efforts, which previously included the launch of an online rating system for its clinicians—based on the results of its patient satisfaction tool.
“We’re not that far from being able to pull together quality data, experience data, and pricing data,” Hess said.
He compared his organization’s projected capabilities in healthcare transparency with the consumer experience on Amazon, with pricing and reviews—among other insights—provided on one website.
“Health care is way more complicated than a pair of shoes. At the same time, we can start to walk you to that future of more data and being able to do comparisons,” Hess said. And pricing, quality, and the patient experience will only increase in importance as out-of-pocket costs continue to rise.
CMS Plans
CMS also is expected to pursue additional price transparency initiatives. For instance, the agency sought information from the public in its rulemaking process last year on “what changes are needed to support greater transparency around patient obligations for their out-of-pocket costs; what can be done to better inform patients of these obligations; and what role providers should play in this initiative,” according to a fact sheet.
“This is not the endgame,” Clarin said about the chargemaster posting requirement. “We view—not just from CMS, but private insurance companies, employers, and consumers—more pushing of healthcare providers to offer better and clearer information about what the costs of services are likely to be.”
The latest requirement also followed the 2018 launch of CMS’s eMedicare initiative, which includes new price transparency tools that let consumers compare the national-average costs of certain procedures between settings. For instance, it allows Medicare fee-for-service beneficiaries to compare their out-of-pocket costs for a procedure based on whether it takes place in a hospital outpatient department or in an ambulatory surgical center.
Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare
