Price transparency is here to stay. The final rule is evidence of that. All of us in the hospital industry knew that trends like consumerization, transparency, telemedicine and remote visits were going to happen. What COVID-19 has done is push what was probably a five-or-six-year trend into six months.
With the transparency final rule set to take effect Jan. 1, 2021, here are five reasons why you and your hospital shouldn't fight transparency.
1. Price transparency benefits hospitals and health systems when conducted properly.
Today, we have a dramatically shifting payer mix where patients are becoming responsible for more and more of their out-of-pocket payment on a daily basis. With that responsibility comes market concerns that force patients to act like consumers and think about their costs before
making a healthcare purchase. Patients want to plan. They want to budget and economically stage themselves before committing to a large financial responsibility like a medical service.
In a price-sensitive market, transparency can satisfy the needs of both provider and patient:
- It alleviates much of the anxiety and fear that consumers face in an opaque system where costs are uncertain.
- It allows a simpler 21st-century transaction, which means more bottom-line dollars to providers. Innovation in the healthcare space has allowed providers to remove many of the intermediaries and their associated costs from the healthcare transaction, which means providers can pass administrative savings on to patients while still maintaining the boost to the bottom line.
Real transparency differs from the prevailing narrative in that when it’s used to streamline and consumerize the transaction, transparency actually creates a higher net revenue to providers while increasing patient satisfaction and access to care.
2. Price transparency is better than it used to be.
Healthcare has experimented with transparency in the past, and many efforts have been unsuccessful. Unpacking those experiments and what made them fail reveals that price transparency falls short unless it is immediately actionable. To make pricing actionable, a patient-consumer must be able to transact on the given information without frustration.
The crucial components of actionable transparency are:
- Transparent prices should represent something that can be purchased with a full understanding of what goes into the purchase and the patient’s full financial responsibility.
- In order for patients to have a full understanding of their cost, minimize surprises and include predictable fees and services as part of a single price. For example, a radiologist’s read fee will always accompany a facility's X-ray fee. This allows patients to make apples-to-apples comparisons and budget appropriately.
3. Creating 300 shoppable services enables actionable pricing along the way to compliance.
The final rule requirement for 300 shoppable services, defined as a service that a healthcare consumer can schedule in advance, is an opportunity to introduce this idea of immediately actionable transparency to your out-of-pocket patients.
Actionable prices allow pre-service and point-of-service collection at multiple touchpoints in the patient journey, from prior authorization through registration. Upfront payment facilitates a better revenue cycle through a predetermined payment instead of unpredictable claims with unknown payments in the future. In addition, beginning cost conversations at the earliest stages of the patient journey can improve patient satisfaction by helping patients understand their financial responsibility, budget for care, and prepare to pay in full prior to the day of service.
Look to your top five to six service lines among out-of-pocket patients to guide your selection of 230 shoppable services outside the 70 prescribed by CMS. These commonly include diagnostic services and imaging but can also include frequently ordered services that could be deemed not medically necessary and denied by insurance. Consider choosing your shoppable services from easily consumerized service lines:
- Diagnostic imaging
- Labs
- Bariatric surgery
- Physical therapy
- Gastroenterology
4. Transparency measures can fill self-pay gaps in your revenue cycle, including the effects of COVID-19.
Every hospital executive knows what their payer mix looks like. There is a block of commercially insured patients, a block of uninsured patients, and a block of patients with catastrophic coverage, high deductibles and others in the out-of-pocket block. Collecting payment from these out-of-pocket patients represents more risk of bad debt than from the commercially insured block, so a pre-service or point-of-service collection strategy is crucial in helping mitigate that risk. This requires transparent, upfront pricing.
What we're seeing now, and what the industry as a whole was unprepared for, is a whole new block in our payer mix who I classify as "between insurance." These are people on furlough, who were laid off, or who otherwise have been in our commercially insured block but have become uninsured due to COVID-19 stresses. They will be insured again in our communities down the road, but more than likely, that will be some kind of high-deductible plan design as employers are trying to bring staff back and lower costs. It's possible these patients could be in the "between insurance" block for the next six months to a year.
These are patients we want to serve in our hospitals. They've been our patients for years. We want to treat them right. One thing transparency and the ability to shop does is allow these consumers to plan for their medical expenses and alleviate some uncertainty, which in turn helps build brand loyalty and makes patients happier.
5. Transparency is a place to increase revenues, reduce collection times, and drive up patient satisfaction.
What we have seen, as a company that leads healthcare transactions in the consumer space, is that when used correctly, transparency can be a tool to drive more out-of-pocket collections, especially pre-service. It can eliminate intermediaries in the purchase and the time spent running
the transaction through them, reducing the time from service rendered to payment from a month or more to a few days. It can increase patient satisfaction and earn patient buy-in by positioning the provider as an ally in helping patients navigate their healthcare costs and addressing their financial health as well as physical.
We encourage providers to take compliant transparency and go further. Make them transactable. Don't approach this transparency rule like a meaningful-use scenario, in which many facilities met the criteria for compliance but stopped short of taking those measures to a place where they could create real benefit in return. Fundamentally, the heavy lifting of the transparency rule is displaying the prices. Know that you have organizations like ours that can not only help providers display those prices but can make them transactable so the facility gains market benefits and good will in the community on top of federal compliance.
Let transparency work for you, not against you.
Transparency doesn't have to be a drain on facilities. Complying with the final rule could be the steppingstone to a robust revenue enhancement strategy that accounts for the rising tides of out-of-pocket patients. Adopting a 21st-century transaction process can help reduce bad debt ratios, reduce collection time, and drive up patient satisfaction. Facilities can use it as a tool to compete in their markets against those facilities that are lagging behind. Let your patients see that you are an ally, that you care about their financial well-being, and collect more revenue for the effort you spent becoming transparent.
References:
1) MedData. 2020 Medical Billing Statistics. https://www.meddata.com/ blog/2017/10/26/medical-billing-statistics/
2) Pecci, A.W., "Publish your prices, boost your bottom line." HealthLeaders. July 2, 2018.https://www.healthleadersmedia.com/ finance/publish-your-prices-boost-your-bottom-line