The mandate by the Centers for Medicare and Medicaid Services that hospitals post their chargemaster in a machine-readable format by Jan. 1, 2019, was well-intentioned to create greater price transparency for consumers. And there’s logic in the declaration: 70 percent of patients in a TransUnion Health analysis said knowing costs before a procedure would help them anticipate charges and budget for payments.
According to Public Agenda research, 56 percent of Americans have researched prices before getting care, although only 21 percent compared prices across multiple providers.
But the CMS rule ultimately has had no impact on consumers, according to feedback.
“The chargemaster is kind of irrelevant to consumers,” said Marah Short, associate director of the Center for Health and Biosciences at Rice University. “These chargemasters don’t reflect what’s being paid by insurers, and they certainly don’t reflect the out-of-pocket or the copayment amount the consumer is paying. And that tends to be what a consumer is going to focus on.”
Not to mention, consumers can’t decipher much of the terminology on the chargemaster, and while price shopping is increasing, it’s still not frequently the main driver of health care decisions.
But that doesn’t mean the rule isn’t having any impact on hospitals. According to industry experts, the mandate’s goal is intended to increase internal scrutiny of pricing, increase pricing accountability, and, in some cases, increase efforts to make prices more transparent than even required by the CMS mandate.
“The information that went out isn’t really valuable, but the mandate is forcing organizations to think more strategically about how they charge,” said Brian Workinger, vice president, payor and pricing analytics with Craneware, a THA-endorsed company that develops automated value cycle solutions for health care organizations. “It’s forcing them to look at where they can reduce costs, and whether it make sense to do that. It has them looking at negotiating different types of contracts and ensuring that their prices are reasonable.”
In April, Craneware released Trisus Pricing Analyzer, which combines negotiated payment arrangements with market factors to provide a clear picture of price competitiveness and business ramifications of that pricing. Even before Trisus was released, Craneware was seeing an uptick in organizations using its older-generation Pricing Analyzer product after the mandate kicked in, Workinger said.
Workinger also said more hospitals are engaging patients in conversations about costs. Those conversations go beyond general pricing to looking at what the patient will actually have to pay out of pocket after figuring discounts and deductibles.
Others, though, are bypassing traditional models altogether. MDSave, an automated, online marketplace where consumers can compare and purchase bundle prices for services at local hospitals and providers, has built itself on market effects from rising out-of-pocket costs due to an increasing number of health plans that allow patients to select lower premiums but higher deductibles.
“You hear a lot of folks say, ‘health care is too complicated, you can’t just shop for it the way you shop for a car,’ or, ‘It’s not as simple as buying something online.’ But in reality, that’s exactly how it functions if you take the time and develop the right processes and tools,” said Paul Ketchel, CEO of MDSave.
The Value of Providing Estimations
Recondo Technology, which offers two solutions that help health systems engage patients in dialogues about their financial responsibility, is also seeing an increase in the number of conversations it is having with providers about designing a patient financial experience using accurate real-time data on their coverage and deductible balance, said Heather Kawamoto, the company’s chief product officer.
Perhaps that’s the best solution for the time being: Hospitals should focus on making representatives readily available one-on-one to interpret the chargemaster and the various elements that go into the out-of-pocket costs for the individual patient. “Patients can often do that today, but they have to jump through a lot of hoops to get that information,” Short said.
Only about 30 percent of hospitals provide estimates to patients prior to care, said Jonathan Wiik, who is principal of health care strategy with TransUnion Health. That number is likely growing as more companies deploy solutions like TransUnion’s Online Patient Estimation, which allows patients to compile their own estimates based on the hospital’s charges and their insurance details.
In Texas, the CHI Texas Division of CHI St. Luke’s recently began providing an online cost estimator tool for each of its facilities.
“The best source for relative pricing information, if insured patients ever actually made a decision on that basis, resides with the health insurance plan. They know their agreement with each provider, whereas each provider only knows its own pricing agreements with the health plans with which it contracts. In effect, a hospital might be able to tell you pricing by service comparing health plans. It won’t, however, be positioned to help compare the same services’ pricing to other providers,” said Lance Lunsford, THA senior vice president for strategic communications and marketing. “Texas hospitals have long supported transparency steps with tools like Texas Price Point to go beyond the CMS chargemaster mandate.”
Be Ready: More Mandates Are Coming
It is widely believed the CMS mandate is just the first step toward the greater transparency the federal government wants to create, the experts said. So hospitals leaders should begin to consider how they want to manage and increase price transparency in their operations — and on the price accountability that will create. If they’re already doing that, they should be better prepared for the next wave of rules.
“I don’t think CMS is done,” Workinger said. “They’re going to push something else. They’re only going to get tighter on the requirement. So organizations really need to act as quickly as possible to get their pricing transparency under wraps, to understand what their charges are and where they’re positioned. Do their prices make sense? Because they’re going to have to push more out to the public.”