CMS now requires hospitals to post “standard charges” for all hospital inpatient and outpatient services online, but compliance may be a challenge if hospitals are careless about how they post prices. The measure could interfere with efforts to draw in patients who use quality and safety scores to choose their hospitals.
In the Federal Fiscal Year 2019 Medicare Hospital Inpatient Prospective Payment System and Long-Term Acute Care Hospital Prospective Payment System Final Rule, CMS requires that hospitals post their price information on the internet in a machine-readable format. The pricing information must be updated as often as needed and at least annually.
The requirement that hospitals make their pricing information available was part of the Affordable Care Act, and many states have similar requirements. But the CMS requirement that it be posted online in a machine-readable format is new, as is the CMS clarification that the pricing represent hospitals’ current standard charges as reflected in their current chargemasters.
(CMS answers to frequently asked questions about the rule are available online at: https://go.cms.gov/2zOr8uQ.)
The new price transparency rules go into effect on Jan. 1, 2019. They apply to all hospitals in the United States, with no exceptions. The requirement for hospitals to post their chargemasters online in a machine-readable format applies to all items and services that the hospitals provide.
Help Patients Understand
The biggest consideration for hospital quality and compliance officers is not just complying with the measure but also considering how to use price transparency as a means to help patients manage their increasing costs of care, says Heather Kawamoto, chief product officer with Recondo Technology, a revenue cycle company based in Denver.
By itself, the CMS measure will not assist patients in better understanding their cost of care. However, it could boost hospitals’ website traffic, so hospitals would be wise to have a price estimator embedded online that generates accurate cost estimates based on patients’ real-time insurance coverage, Kawamoto says.
“And they need that help. The latest stats tell us that almost half of the insured are now on high-deductible plans. Just publishing the chargemaster list isn’t sufficient in giving patients a better handle on their financial responsibility for healthcare, but it can drive them to the hospital’s website,” Kawamoto says. “Once at the chargemaster list, patients should be directed to an online price calculator that gives a true and accurate estimate based on the patients’ current coverage. These calculators can be configured to give patients additional information about financial assistance and payment programs.”
This will effectively open the door to meaningful conversations with the patient while increasing the likelihood of payment, she says. It is well established that people who have an accurate understanding of what they will owe prior to services are more likely to pay for those services. Moreover, engaging consumers in financial dialogue can often defer them from bad debt to charity care programs, reducing costly write-offs for providers.
Concerns About Potential Confusion
Hospital leaders are concerned about how best to meet the CMS requirement and specifically about the potential confusion this is going to cause patients, Kawamoto says.
“Many providers are behind in meeting consumer need for accurate estimates of their out-of-pocket responsibility. More and more, we’re seeing it not only become an issue of compliance but one of competitive differentiation for those organizations who understand the growing importance of the patient’s financial experience,” she says.
Problems could arise if any of the chargemaster prices are exorbitant, suggesting charges that are far higher than what patients actually might pay, says Valerie Barckhoff, healthcare advisory practice lead at Windham Brannon, an accounting firm in Atlanta.
“The minimum requirement could prove to be problematic for hospitals. Charges do not equal out-of-pocket costs for the patient,” Barckhoff says. “Are facilities aware of any ‘gotcha’ charges that still exist on their chargemaster? Do they know how their story will be told in the local newspaper?”
Hospitals need to think strategically about meeting the requirements of the price transparency rule, Barckhoff says. Step one is to comply without having any public relations issues. Step two is to turn price transparency into a competitive advantage, she says.
“How will the patients know their true out of pocket? Will they be able to quickly access a financial counselor or scheduler?” she says. “What services are more prone to be shopped online?”
Still Questions on Compliance
Even with the clarifications offered by CMS, there still are some questions about compliance with the rule, notes Jonathan Wiik, principal for healthcare strategy at Chicago-based TransUnion Healthcare, which assists healthcare organizations with revenue cycle issues.
While the rule applies to all services and items provided by a hospital, some hospitals are trying to provide that information in a format other than their actual chargemasters, he says.
Some also are questioning whether CMS really expects every single procedure and item, thinking they might get away with posting only a list of the top 100 procedures, for instance, or not posting pharmaceuticals. That is risky business, Wiik says.
“The pharmaceuticals are typically transacted directly to a dispensing machine, and people usually aren’t shopping drug prices within the hospital,” he says. “My advice is that the CMS rule says the chargemaster, and that’s what you should go with. You’re complying with the regulation at its minimal bare bones, and any time you’re trying to comply with the government, that’s the lane you want to be in.”
Although healthcare leaders may try to parse the wording of the rule to find ways around posting the chargemaster, Wiik says that is just inviting scrutiny from the government for no real benefit. Any time you deviate from the explicit requirements of a government rule, you have to be able to defend your reasoning, and Wiik says there is no benefit that justifies that effort.
“Your chargemaster should be posted in raw form on the Internet somewhere, without any modification,” Wiik says.
There is no requirement for calculating out-of-pocket costs, Wiik says, but doing so still might be a good idea because otherwise the “sticker price” of some procedures could scare patients away and work against the idea of giving consumers more transparency about healthcare costs, he says.
The real effect of the CMS rule may be that hospitals will have to educate patients more about costs the way they have made strides in recent years to educate them about quality and safety, Wiik says.
“You can’t just comply with the reg, set it, and forget it. Realize that you’re opening a box when you’re showing consumers your prices,” Wiik says.
“How are you going to help them understand those numbers and how it all relates to their individual experience at your hospital? Once you’ve opened that up, you have to help them understand what it means or else another hospital might put a better spin on it and draw them away.”
- Valerie Barckhoff, Healthcare Advisory Practice Lead, Windham Brannon, Atlanta. Phone: (404) 898-2000.
- Jonathan Wiik, Principal for Healthcare Strategy, TransUnion Healthcare, Chicago. Phone: (800) 916-8800.