Written by Dave Schafer

The Centers for Medicare & Medicaid Services’ new requirement that hospitals post standard prices online in a machine-readable format starting Jan. 1 is not as jarring as it first seems. For several years, the Affordable Care Act and its rules have required each hospital to publish, update and make public a list of its standard charges for items and services provided by the hospital including for diagnosis-related groups.

However, CMS increasingly is focused on hospitals better communicating charges to help patients understand financial liability and allow them to compare charges for similar services, said Micky Allen, director of payor and pricing analytics for Craneware, Inc. Craneware develops business intelligence and revenue-cycle software for hospitals and health systems.

The new requirement, which is intended to make those prices more accessible, is along those lines.

It’s that simple ... except that it’s not, really.

For one thing, the specifics behind that requirement aren’t as clear-cut as it seems they should be, Craneware’s experts said. CMS' requirement says, “standard charges,” “machine readable format,” and “online,” but doesn’t clarify what those phrases mean or what they cover, said Margene Holak, Craneware’s customer success manager.

“CMS published an FAQ that gives some answers, but a lot is left for organizations to figure out exactly what this means and whether what they think it means will meet the compliance requirements,” she said.

Another complication is that price transparency is about more than just posting prices. It involves defending those prices as well.

Experts offer the following advice that can help hospitals meet the spirit of the new requirements, at least.

Think Procedure Level, Not Line-By-Line

To prepare for the new regulations, hospitals must look at the content they post as if they were a member of the public. That means billing codes and a simple list of charges might not be useful.

“Uploading the CDM (charge description master) makes no sense because most of the descriptions on the CDM don’t make sense to the average patient,” said Mark D. Evard, division vice president of revenue cycle with CHI St. Luke’s Health in Houston. “Why would you want to confuse the public more?”

Plus, large systems like CHI St. Luke’s have thousands and thousands of CDM line items — too many for a consumer to wade through, which defeats the attempt at transparency.

Holak pointed out that CDM prices also are not in direct connection to what a patient would owe, thanks to payer policies and payment methodologies. It’s better if hospitals can aggregate the charges and display them by procedure. If hospitals can calculate the cost of a knee replacement, for example, that’s detailed enough, Holak said.

“Encounter-level reporting is going to be much more beneficial and proactive because it gets more of a total estimate of what the patient’s charge would be,” Allen said. “But it’s harder to do.”

But if Hospitals Must Upload the Chargemaster...

The easier solution is to simply upload the CDM or list of charges, which many hospitals will do because of time constraints, Holak said.

As of Jan. 1, 2019, all hospitals are required to publish standard charges for all items and services on a public-facing website in a machine readable format and to update this information at least annually, or more frequently, as appropriate, according to an August rule from the Centers for Medicare & Medicaid Services. In the adopted rule, CMS stated “This could be in the form of the chargemaster itself or another form of the hospital’s choice, as long as the information is in machine readable format.” However, although not formal regulation, in a recent FAQ and a Nov. 13 open door forum, CMS now interprets the rule to require hospitals to post information representing “the hospital’s current standard charges as reflected in its chargemaster.” CMS interprets “machine readable format” as a digitally accessible document easily imported/read into a computer system (e.g., XML, CSV), rather than a PDF.

“If that’s what you’re going to do, you should think about what an average person needs to see to understand it,” she said. Look at charge descriptions; is the CDM language too cryptic, or too filled with acronyms or abbreviations, to be understood? If that’s the case, consider revising the language.

Clean up the CDM as much as possible, Holak said. Remove non-patient charges, statistical or productivity measures, and other “clutter.” Look for variances from the current hospital pricing policy, such as procedures, supplies or drugs out of line with the expected pricing. Also look for disparate pricing where the same CPT code is assigned to more than one charge with different prices.

One way to decide if a hospital’s information is clear to a consumer: Perform secret shopper experiments within the hospital's website to see how well the info is communicated, Holak suggests.

Finally, consider having clinical professionals look at price comparisons for the services in their expertise; do your prices make sense in comparison?

Keep Information Up to Date, Even After Jan. 1

To create the list of charges, check whether the hospital has an automated CDM software tool. If so, the software vendor may have developed a report to help produce a list in a machine-readable format, Holak said.

CHI St. Luke’s system is using an agency to help it aggregate its charges by procedure and publish that online. Even after Jan. 1, there’s plenty hospitals can do related to the new regulations. They can update or improve the presentation of the prices or clean up the CDM and post a new version.

“If a hospital is going to work with IT to get that data posted, also have a way to feed in revisions and changes,” Allen said. “You don’t want to have outdated data in there and have people asking questions with incorrect or outdated data.” Expect that there will be questions once the charges are posted, so the cleaner and clearer the posted list is, the easier it will be to have easy, consistent answers, Holak said. Being prepared to answer the questions may require extra training for hospital employees. “You want to have front line staff who can talk through this and provide a good, educated estimate,” she said. “Pricing transparency is more than just listing charges. It’s being able to have some way of explaining it in a way that a patient or a public person can understand.”

Remember, It’s About Serving the Patient

The new CMS regulation increases the need for strategic and defensible pricing because of the increased exposure of prices, Allen said.

Start thinking about that now, he advised. Hospitals must be ready to defend or explain why charge data can seem disconnected to the price patients pay because of copays, deductibles and other factors.

Hospitals taking a new view of their pricing is good for consumers and hospitals, the experts agree.

“We get frustrated with the government putting mandatory requirements on us,” Allen said. “But the intent is to try to get better information to the patient to help them make informed decisions. Try not to look at it as just a directive, but as something that can make a better process experience overall.”