Health systems must exceed CMS pricing changes to delight patients

A new year is upon us and with it the activation of the Center for Medicare & Medicaid Service’s (CMS) price transparency rule.

Despite the promise of the dawn of a new era in healthcare transparency, a literal interpretation of the CMS rule will not deliver true transparency and will instead lead to patient confusion and frustration.

The new rule requires only that systems make their current standard charges available online in a machine-readable format at least once a year beginning January 1, 2019. Unfortunately, the standard chargemaster required by CMS is the raw material cost of services. This is the equivalent of pricing a Gap t-shirt using the cost of a bale of cotton. Or comparing gas station prices according to the cost of a barrel of crude oil.

Patients do not want the raw material cost for medical services. They need an adjustment from raw input cost into the end retail price for services. At a time when 9 in 10 patients expect health systems to provide digital price transparency tools, system leadership must go above and beyond the CMS baseline changes to attract and retain patients. Barak Richman, a law professor at Duke University put it best in a recent Health Leaders article about the impact of the CMS rule: "Chargemasters are enormous spreadsheets with incredibly complicated codes that no one short of a billing expert would be able to make sense of.”

Innovative systems are already in front of the CMS with more aggressive transparency initiatives. St Luke’s University Health Network has built a Price Checker product that allows patients to search for prices for common diagnostics and procedures along with viewable options for payment. When asked in a recent Morning Call article about this, SVP of Finance Francine Botek explained:

“[Standard charges] are similar to hotel rack room rates or automobile sales ‘list prices’ (that) no one pays..while we believe that the CMS requirement is a move in the right direction, it does not provide patients with an easy answer to what health services actually cost.”

St Luke’s is not alone in recognizing this problem. In fact, in a PMMC Healthcare Business Insights survey 92% of providers said they are concerned about how patients will respond to seeing chargemaster prices. Here are three keys that systems should keep in mind as they seek to meet patient pricing demands.

1. Make It Easy

Patients are simply consumers, accustomed to digital, self service models for everything from retail to travel experiences. They do not want to call hospital support teams for information. Put the power in their hands and alleviate your own operational burdens through an intuitive, self-service pricing tool that’s accessible by a mobile phone.

2. Personalized Quotes

More than knowing the retail cost of services, patients want to understand what it will cost them individually. Providers must deliver personalization in the form of tools that account for a patient’s insurance information to give them an accurate, actionable estimate.

3. Prioritize High Demand Services

It’s easy to feel overwhelmed by the breadth and complexity of services. The 80/20 rule applies well in this case. By addressing providing personalized out of pocket pricing details on the most common 20% of diagnostics and procedures, you can likely address 80% of patient requests. This makes it easier on patients and your development teams. Just be sure to provide obvious and easy paths to escalation for the remaining estimate requests.

By Tomer Shoval, CEO of Simplee

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