Big Expectations for ‘Transparent’ Costs: Can Patient Access Meet Them?
Calls for healthcare transparency are growing louder. Smart patient access departments are heeding those calls.
“The hope is that making healthcare prices known will lead patients and their advocates to shop for care based on price,” says Anna D. Sinaiko, PhD, an assistant professor of health economics and policy at Harvard T.H. Chan School of Public Health in Boston.
Several states have passed laws requiring that hospitals provide price quotes on request. Generic information isn’t enough; it must be personalized according to the patient’s insurance.
“The federal government, along with individual senators and representatives, is also calling for greater transparency,” Sinaiko says. There is increasing evidence that prices vary widely for the same medical services, even within local areas.1,2 However, studies show only limited correlation between clinician prices and quality. “Expensive care is not, on average, better quality,” Sinaiko notes.
Requiring hospitals to post charges is of surprisingly limited benefit to patients. “It is an imprecise way to help a patient plan financially,” says Suzanne Delbanco, PhD, executive director of Berkeley, CA-based Catalyst for Payment Reform.
Posted charges represent little more than a hospital’s starting point for negotiation with health insurers. “Almost no one ever pays the ‘charge’ amount,” Delbanco explains. Insurance plans negotiate steep discounts. Patients usually only pay their deductible, copay, or coinsurance. Therefore, says Delbanco, “health insurers are likely in a better position to give patients more precise out-of-pocket estimates.”
Patients want to know what they are in store for clinically. Wary of skyrocketing healthcare costs, patients also expect to understand what they are facing financially. “Increasingly, they want to know this upfront, before the services are rendered,” says Michael Thompson, president and CEO of the Washington, DC-based National Alliance of Healthcare Purchaser Coalitions.
Often, patient access staff cannot provide a good answer for patients. One reason is lack of information on how contracts are structured for each payer. “The hospital payments are only the tip of the iceberg,” Thompson offers. Multiple professional services and other services also are added to the patient’s bill. Bundled payments are a growing trend, to promote transparency on how patients and plans are billed for procedures. “Expect to see more of this going forward,” Thompson adds.
A new proposed rule from the Centers for Medicare & Medicaid Services (CMS) mirrors other earlier price transparency efforts. The agency is focused on requiring charges to be published online so those charges are publicly available to patients.3
“While this is admittedly a first step for CMS, publishing charges has shown little practical utility for patients in previous efforts nationwide to improve price transparency,” says Samantha Wyld, a senior director at Optum Advisory Services.
Patients may not be interested in receiving an answer to a general question like, “What is your standard charge for this procedure?”
“This often has no correlation to the patient’s out-of-pocket obligation,” Wyld argues. Patients want an answer to a different question, one that is more difficult to answer: “What is this going to cost me?”
“Price transparency legislation is not new,” Wyld notes. “In fact, ‘early adopter’ states like Massachusetts have been passing price transparency legislation since 2012.”
It is no longer enough for hospitals simply to meet the specific requirements of the CMS proposed rule. “Organizations need to go above and beyond legal requirements to truly take the mystery and ambiguity out of healthcare costs,” Wyld offers.
Patients want nothing less than customized price estimates from patient access departments. “It’s critical to get this right,” Wyld stresses. These take into account each patient’s unique insurance coverage, plan benefits, contract structure, deductibles, and coinsurances/copayments. Sinaiko sees the movement toward price transparency as a “work in progress.” One thing is certain: Patient access must develop better processes for generating insurer-specific price estimates. “Efforts will focus on making patients aware that they can shop for healthcare based on price, and to make price information more readily available,” Sinaiko says.
According to Wyld, patients are not just going to the closest hospital anymore. People make healthcare choices based on out-of-pocket obligations, how easy it is to obtain that information, and the convenience and flexibility of payment options to meet their financial obligations.
“Hospitals win or lose patient loyalty based on whether they can provide a premier and differentiated experience,” Wyld says. This is true both for price-shopping patients and for patients already receiving services at the hospital, she says. Wyld says patient access departments should take these steps:
- Engage in financial discussions earlier. “Patients want and need to anticipate their out-of-pocket costs before receiving care, way before receiving a bill, to be prepared financially for their share,” Wyld says.
- Ensure that staff are capable of conversations about out-of-pocket costs. “Leaders should be ensuring they have the right skill development and education for staff in patient-facing roles,” Wyld advises.
- Measure performance when it comes to price estimates. “Leaders need to gauge how their organization stacks up in terms of delivering a strong and seamless patient financial experience,” Wyld adds.
REFERENCES
- Newman D, Parente ST, Barrette E, Kennedy K. Prices for common medical services vary substantially among the commercially insured. Health Aff (Millwood) 2016;35:923-927.
- Hussey PS, Wertheimer S, Mehrotra A. The association between health care quality and cost: A systematic review. Ann Intern Med 2013;158:27-34.
- Federal Register. A proposed rule by the Centers for Medicare & Medicaid Services, May 7, 2018. Available at: https://bit.ly/2wxb6WQ. Accessed Aug. 2, 2018.
Calls for healthcare transparency are growing louder. Smart patient access departments are heeding those calls. Several states have passed laws requiring that hospitals provide price quotes on request. Generic information isn’t enough; it must be personalized according to the patient’s insurance.
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