Price transparency final rule: 6 steps to prepare

Waystar recently hosted a webinar on a topic that's top of mind for hospitals around the country — the CMS final rule on hospital price transparency.

We were joined by seasoned healthcare experts Brenda Christman and Jackie Nussbaum from accounting and advisory firm BKD, who unpacked the mandate and outlined a readiness plan so hospitals can hit the ground running in 2021. You can watch the on-demand webinar in full here, or keep reading for a helpful summary.

What's driving price transparency reform?

Although there's been bipartisan support for price transparency for years, momentum picked up last summer when President Trump issued an executive order calling for hospitals to publish prices in the hope it will promote greater competition and ultimately drive down healthcare costs. 

The government isn't alone in calling for stronger transparency. With deductibles and out-of-pocket expenses climbing, patients want to know what they're responsible for financially. They expect the same level of consumerization they're used to when shopping in any other industry.

Between the COVID-19 crisis and recent legal action brought by the American Hospital Association and other hospital groups, many in the healthcare community suspected the current deadline may be revised, but after a decisive district court ruling in late June, it appears the final rule will go into effect as planned. Although the AHA is filing for a rapid appeal and 34 state hospital associations have asked for a delay, providers have a short runway to be fully compliant by Jan. 1, 2021.

What you need to know about the final rule — and how to prepare 

The CMS final rule (CMS-1717-F2) aims to make hospitals' price information readily available to patients, so they can compare costs and make more informed healthcare decisions. Meeting the deadline and maintaining compliance will be no small endeavor for providers. In fact, CMS estimates each hospital will spend an average of 150 hours and nearly $12k to review and post their standard charges for 2021 — and some experts suggest this projection is too low. 

The Waystar + BKD webinar outlines eight steps to help hospitals prepare in a smooth and cost-effective manner. Below is a condensed version of that list:

1. Assemble a task force + understand final rule requirements

Complying with the mandate will be a large undertaking that requires multi-disciplinary coordination. One of the first steps is to assemble a price transparency task force with leaders from all revenue cycle departments, including legal, IT and compliance. It's important stakeholders fully understand the final rule and how everyone plays a role in meeting its two requirements: 

  1. publishing the five standard charges for all items and services in a comprehensive machine-readable digital file; and
  2. publishing a list of standard charges for at least 300 nonurgent, "shoppable services" in a patient-friendly format.

If a facility is found to be noncompliant, CMS may issue a written warning, a corrective action plan or a $300 daily fine.

2. Gather data + review contract terms

The next step is to conduct a comprehensive review of all payer contracts and how the five standard charges break down for each item or service. The five standard charges are: 

  • gross charges
  • payer-specific negotiated charges
  • discounted cash prices
  • de-identified minimum negotiated charges
  • de-identified maximum negotiated charges

These charges, which include everything from supplies and facility fees to room and board, need to be updated annually. Bring your task force together to build a payer grid that matches key contract terms to revenue and usage.

To meet the shoppable services requirement, your task force should execute claim analysis for the most common services, including any primary and ancillary services that accompany a given shoppable service. This file should also include standard charges (with the exception of gross charges) and be                        prominently  displayed on your website. 

Meeting both parts of the mandate begins with good data. Collaborate with other stakeholders to retrieve and review CDM data, revenue and usage data by payer, lists of scheduled encounters, contract payer grids, and remit data. 

3. Evaluate whether to partner with external resources  

As mentioned, within the first year of the new regulations, CMS estimates the average hospital will need to allocate roughly 150 hours to compile and post standard charge info. This estimate could be even higher depending on factors like a facility's number of negotiated payer contracts or the size of their                      chargemaster. It's important to ask: Does our organization have the resources to tackle this directive, or do we need outside assistance?   

4. Consider a price estimation tool 

If a hospital offers an online estimation tool that's consumer-friendly, free for all patients, prominently displayed on their website and accessible without having to create an account or password, the facility will be in compliance with the shoppable services requirement (hospitals must list at least 300 shoppable                  services, 70 of which are defined by CMS). Learn more about Waystar's Patient Estimation solution here.

5. Refine pricing strategy

Many hospitals are using the final rule as an opportunity to revisit their pricing strategy — and some facilities haven't performed a thorough pricing review in years. Whether you set prices based on market averages, a multiple of cost, markup over Medicare or a combination of the three, this is a perfect time to                take a deeper look at how your prices for commodity services compare to those of other facilities in your area.

6. Prepare + publish charge files

Gathering the data to ensure compliance will be complicated and time-intensive, so it's imperative to start the process now. Once you've built the two required files, partner with your IT and marketing/communications teams to ensure the lists are effectively incorporated into the greater architecture of your website. 

The wrap-up

Whether you're just getting started or well on your way to preparing for CMS' final rule, we hope you found this checklist helpful. To learn more, watch the full webinar here. You can also check out Waystar's Price Transparency resource center for additional information about the regulations, other on-demand webinars and much more. 

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