It’s Not Too Late to Ramp Up Price Transparency Compliance

By David Mistkawi and Nick Davis

A new price transparency rule goes into effect on Jan. 1, 2021—but with so much disruption in healthcare due to the COVID-19 pandemic, most hospitals won’t be ready for it.

Under the rule, hospitals must post prices for 300 “shoppable” services—including their negotiated rates with commercial health plans—and produce a machine-readable file of standard charges for all hospital items and services. When the rule was published last year, it stated that organizations that failed to comply with the rule could be fined up to $300 per day. Now, however, the final inpatient prospective payment rule published in September 2020 states that hospitals that fail to disclose their median negotiated rates with Medicare Advantage plans could be denied any Medicare payment.

But as the bulk of providers’ focus shifted toward coronavirus response and recovery this year, efforts to comply with the new rule stalled. Revenue cycle staff moved to a remote work environment, and as elective procedures were delayed, some patient access staff were furloughed. While some hospitals were able to creatively deploy patient access staff to prepare for the new regulations, most did not have the financial ability to use resources in this way. As hospitals seek to reschedule delayed elective procedures and preventive care, revenue cycle departments’ primary focus is on dealing with pent-up demand, not the price transparency order.

Now, with just three months to go before the order takes effect and fewer COVID-related emergencies to sort through, you can almost hear a collective gasp among revenue cycle leaders: “How are we going to meet these requirements by Jan. 1?”

It’s a daunting task, given the complexity of the rule and the cost of compliance. CMS estimates the cost of compliance will fall between $15,000 to $20,000, but the American Hospital Association says collecting the pricing information and sharing it in a consumer-friendly format could cost hospitals $400,000 to $500,000 a year.

Avoiding Compliance Isn’t the Answer

There had been talk that the financial penalties of non-compliance are so low and the costs of gearing up for the rule so high that some organizations could choose noncompliance as a strategy. But that’s an approach that could backfire, given the consumer trends we’re seeing during the pandemic and the potential for hospitals to be denied any Medicare payment for noncompliance. In 2019 alone, 18% of hospital revenue came from Medicare.

Consumer digital adoption accelerated five years during the pandemic, according to a McKinsey analysis. Among consumers who used digital for the first time, 75% plan to continue using digital services even after the pandemic is over. For healthcare revenue cycle, that means a big uptick not just in digital payment—which hospitals are already seeing—but also, ultimately, the percentage of consumers seeking to schedule and shop for services online.

Today’s post-COVID consumers also increasingly favor non-person-to-person interactions. At one of our favorite restaurants in Portland, Ore., Reverend’s Barbeque, the only human interaction that customers have is when an employee opens a window to hand customers their order. Everything else, from ordering through payment, is handled digitally. That’s the model we’re going to see in healthcare revenue cycle. Consumers expect an all-digital experience, end to end, with human interaction reserved for scenarios that truly require assistance.

This paradigm shift demands that hospital revenue cycle departments reimagine the patient journey with an eye toward self-service, highly transparent, highly digital interactions. In a post-COVID environment, price transparency isn’t just about compliance. It’s about meeting consumers’ expectations for the patient financial experience.

Meeting the New Year’s Deadline for Compliance

So how can hospitals push forward with price transparency to meet the January deadline?

The first step is understanding that technology alone is not the answer. Hospitals can apply technology such as online cost-estimator tools to comply with the price transparency mandate, but unless they have the right processes, culture, and staff to support transparent communication, these tools won’t help them increase patient collections. Revenue cycle leaders should consider:

  • What changes should be made to patient financial communications in a self-service environment to support highly informed interactions, including around out-of-pocket costs? For instance, what types of follow-up communications are needed for patients who are shopping for services online?
  • Do we have the right talent in place to elevate the patient financial experience?
  • Does our culture support the move toward heightened transparency? If not, how can we bring staff and managers on board?

Second, ensure the tools you choose to support transparency provide accurate estimates. When patients shop for services, online cost-estimator tools, which are quickly becoming the new normal, should take into account patients’ insurance coverage and service-specific copay and coinsurance—and should deliver precise estimates based on benefits used to date, such as the patient’s remaining deductible. Estimates should then calculate allowable costs under the patient’s insurance plan, based on the provider/payer contract, in order to accurately calculate expected out-of-pocket costs.

This is an instance where setting patients’ expectations around payment early in the encounter—such as by communicating with the patient soon after an estimate is generated—will be crucial not just in securing their business, but also securing payment.

Third, evaluate your choice of a partner carefully. Hospitals that have a long way to go toward compliance likely won’t be able to meet the Jan. 1 deadline for price transparency on their own. But one size doesn’t fit all. Look for a partner that takes a holistic approach to provide a transparent, consumer-friendly experience, from online price estimation to financial clearance to payment. Make sure the solutions recommended fit the unique needs of your organization and your market.

By fully assessing your options for rapid compliance with the COVID-19 consumer paradigm in mind, hospitals can more effectively outline the right path forward, strengthening consumer engagement and their bottom line.

bio:
David Mistkawi is vice president, access solutions for The SSI Group.
Nick Davis is vice president, access product management for The SSI Group.

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