MedCity Influencers, Hospitals

Preventing $2 million in fines – 3 things hospitals can do to ensure clarity in transparency

There are a few ways to make it easier on hospitals to accomplish price transparency and some common mistakes they can avoid so they don’t have to pay excessive fines.

In July, the American Hospital Association said it was “deeply concerned” about the CMS’s proposed fee hike for hospitals not in compliance with its price transparency rule. The CMS recommended upping the $300-per-day fee to $5,500 for hospitals with more than 30 beds, which is potentially over $2 million per year. That’s a scary number for rural and mid-size hospitals, and larger hospitals certainly won’t like being saddled with it either. There are a few ways to make it easier on hospitals to accomplish price transparency and some common mistakes they can avoid so they don’t have to pay excessive fines.

Prioritize consumer access

First off, to comply with the CMS’s mandate, hospitals have to prioritize user-navigation and user-friendly design in an easily downloadable format (not pdfs). This information must also be machine readable and contain gross charges, negotiated specific reimbursement rates by payer, a self-pay “walk-in rate” and a minimum and maximum negotiated reimbursement rate covering all services and all payer. These items, coupled with a publicly available and consumer-friendly price estimator, are essential for avoiding fines from the CMS. Some hospitals are still posting incomplete information to their website, or, not posting any services at all. Some are even preferring to pay the fine each year. It’s likely that the CMS will keep raising the fine each year if that remains the case. Hospitals should be striving for clarity in their approach to reorganizing their 300 most common services (and the 70 required services from the CMS).

Realistically, the goal of price transparency is ensuring that patients aren’t cutoff from care due to unexpected charges, and to increase employee wages, according to the Biden administration. Healthcare remains the only service where a customer can walk in, receive care, leave, and still have no idea how much to expect to pay come bill time, regardless of what their insurance says beforehand. This is due to a number of factors, but hospitals displaying their prices upfront can help educate customers and provide a better sense of the cost of the services they may require.

Call out bundled services

Secondly, hospitals also need to be wary that they aren’t relying on their chargemaster too much for listing out service charges, as this could bundle costs together. The chargemaster is a useful internal tool for keeping track of all services, and it must be posted by itself somewhere on websites, but it doesn’t tell the whole story. Most hospitals receive reimbursements for inpatient services based on DRG rates or per diem rates. An important feature to note here is that it’s critical to list services which are bundled by specific payers and which aren’t. That will help avoid common mistakes with the price comparison section regarding payer data.

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Gather internal data to improve efficiencies 

Finally, this is a chance for hospitals to avoid mistakes within their data structures and refresh any outdated systems and implement new features to best serve customers, such as swapping out manual spreadsheets for an automated processing software. Some side benefits of the data gathering process are renewing contracts and potential payer outreach that could lead to updated reimbursement structures for hospitals.

If a competitor down the street isn’t in compliance, that could drive more patients to the compliant location instead. While checking out competitors, make sure to also take a look at published reimbursement data to compare agreements to neighboring facilities. After hospitals have gathered all their appropriate data from different payers, they can start to use that data in future contract negotiations. Additionally, providers can start to be aggressive and develop market strategies around key price sensitive services and price them competitively using published data from other healthcare institutions.

Looking towards the future, hospitals listing prices for all of their services won’t solve all the issues in the U.S. healthcare system, as surprise charges still rear their heads in addition to other customer woes. Hospitals and patients also can’t predict all services required at the outset of care, and contract structures may force hospitals to charge wildly different prices for the same services under different payers. However, hospitals and patients need all the help they can get in working together to create a safe, clear, and transparent healthcare environment.

Photo: azatvaleev, Getty Images

Kelly Arduino has over 20 years of experience in working with healthcare and senior living organizations. She is the industry leader of the healthcare practice at Wipfli, which combines the strengths of consultants and CPAs to provide financial and strategic services to clients. Kelly is a former investment banker and is well-versed in financing options and debt structure to assist in the evaluation of project feasibility and capital plan development.

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