Optimizing the revenue cycle for price transparency regulations and consumer demands
by Lori Harrington
A few months after the June 2019 White House executive order on price transparency, HHS released two rules aimed at fulfilling the executive order and making healthcare costs more transparent to patients. In the Price Transparency Requirements for Hospitals to Make Standard Charges Public final rule, HHS requires hospitals to make prices publicly available online in a consumer-friendly, easily understood format. The requirements of that rule are currently set to take effect in 2021. The second, the Transparency in Coverage proposed rule, would require insurance companies and group health plans to provide cost estimates prior to care, requesting they provide a list of available pricing information to the public.
These two rules represent a proactive effort to provide healthcare cost information to patients, but their effects aren’t solely on patients. The final rule, which takes effect January 1, 2021, has a substantial impact on hospitals. Among other requirements, in addition to posting expanded charge information online in a machine-readable format, hospitals must publicly release a list of 300 “shoppable” services. These include 70 services defined by CMS in the final rule and 230 “hospital-selected” shoppable services. At a minimum, this mandate will require hospitals to leverage technology and change processes so they can give patients anytime, anywhere access to easy-to-understand cost information. But beyond these requirements, the new regulations are an opportunity for healthcare organizations to give patients what they’ve ultimately been asking for: a patient-centric financial workflow that engages them, coupled with the ability to truly compare and shop for their care.
Today’s patients want ongoing financial engagement that not only helps them manage and pay their care costs, but also allows them to better understand the value of what different healthcare organizations offer. To thrive in an increasingly competitive, consumer-driven environment, healthcare organizations must develop a strategy to give patients these capabilities.
Meeting core price transparency regulations
The new price transparency laws aim to give consumers honest, plain-language information about their potential care costs so they can be better informed when making decisions about where to go for their treatment. Due to the complexities and moving components of care costs, developing a body of accurate and up-to-date costs will be a daunting endeavor for many healthcare organizations. Simply posting a detailed chargemaster online won’t enable hospitals to meet the regulations, as information in the chargemaster format doesn’t generally meet the required standards for being consumer friendly.
The simplest, most straightforward way to meet at least some price transparency regulations is by implementing a cost estimator tool. According to the final rule, hospitals that maintain an internet-based price estimator tool that meets specific requirements will be exempt from posting a separate list of 300 shoppable services. Working with a vendor that has proven cost estimator technology in their toolkit can allow organizations to meet this complex requirement. A cost estimator will also provide value to patients who are shopping for services across competing organizations. Meeting regulatory requirements while giving patients a positive experience should be the end goal. Therefore, healthcare organizations should evaluate cost estimator technology to ensure it can:
- Meet all detailed regulatory requirements such as “easy-to-read,” “consumer-friendly,” and “display of shoppable services,” providing the necessary body of pricing information in an accurate, concise, and clear fashion so consumers can find what they need without contacting your staff for assistance
- Provide a comprehensive and positive experience for all individuals who need pricing information, whether they are researching costs on your website or receiving an estimate at time of service
- Reduce rather than increase manual and administrative work for your team, integrating with internal systems to allow for automated updating and displaying pricing information to consumers
If your organization decides to develop healthcare pricing information without using a cost estimator tool, you will need to think of this body of published care costs as a product to be developed and managed by your organization. Thoroughly plan for this product’s development by allocating the right internal resources, forming a committee that not only develops the cost information but also manages it on an ongoing basis to ensure it remains accurate and meets consumer needs. This committee should include the chief medical officer, corporate planning, supply chain management, various roles within revenue cycle management, information technology, regulatory compliance, and marketing. Some of these titles may seem surprising, but each has an important role. For instance, it is recommended that an experienced product manager drive development, as the intended result is a product that will be a hands-on tool for your consumers. Corporate planning can share information regarding market competition for various services, and the supply chain team understands the accountability of accurate pricing.
Healthcare organizations that implement the right technology to integrate and automate cost estimate updates are taking a major step toward giving patients a cost-efficient, “shoppable” experience—but they’re only taking the first step in providing everything patients want when it comes to financial management.
Going beyond the minimum requirements
Consumers are increasingly using the internet to compare provider costs, and a 2019 Deloitte study indicates nearly half of American consumers would like to take advantage of a tool that lets them directly compare provider pricing. As consumers gain more research savvy, they will begin to question more than merely the cost of care. For example, in this same Deloitte survey, 53% of consumers said they’d like to be able to compare quality and satisfaction scores in addition to cost.
This growing consumer sophistication will necessitate a shift in provider focus. In addition to meeting all the necessary regulatory standards, healthcare organizations must work even harder to become a differentiated market leader by understanding every facet of their care costs, striving to reduce those costs without hindering quality, and communicating their market differentiation to patients. Patients will expect the same consumer-friendly financial experience they have in retail and banking environments, and they’ll increasingly use all the tools available to shop for pricing and compare healthcare organizations. These new demands will impact the entire revenue cycle. The revenue integrity team is uniquely positioned to help meet price transparency requirements as well as achieve next-generation price transparency by defining and communicating the organization’s value.
The revenue integrity team’s role in achieving next-generation price transparency
Revenue integrity staff can play a critical role in helping your hospital achieve next-generation price transparency—going beyond providing care costs to help patients understand your organization’s value and make informed choices about their care. The revenue integrity team can help tighten the revenue cycle, removing gaps and waste, and identify where your organization has the greatest value through initiatives such as:
- Embracing coding automation. Considering the return on investment, automating coding is low-hanging fruit for most healthcare organizations. Your team knows what codes are used most frequently at your hospital. Therefore, you can embed these codes into your EMR or EHR to make sure they are automatically updated within your chargemaster. As you automate your downstream systems that code from your chargemaster, you’ll begin to see greater efficiencies that ultimately reduce waste and cost from your revenue cycle. As a result, you can catch any gaps or errors in clinical documentation and coding before your patient leaves. When coding is accurate, your cost estimation will be more accurate as well.
- Conducting an analysis to determine cost estimate accuracy. Review cost estimates for the past six months to determine their accuracy. For instance, compare the cost estimate for surgery for a distal radius fracture with the bill you sent 60 days later. If your estimate wasn’t accurate, how far off were you and what caused the gaps? Are the gaps due to coding or chargemaster updates? Once you answer these questions, you can work to clean up your processes and know exactly how to automate your workflow to achieve efficiency and accuracy.
Success in price transparency’s beginning stages and beyond
Healthcare is only at the beginning stages of price transparency, which is an evolving process that isn’t always easily understood. Due to its complexity, healthcare organizations may have been slow to adopt price transparency—but even if today’s laws weren’t mandating it, the increase in consumer demand would. Patients want to understand what they’re paying for before they receive the service, and providing this information can only help healthcare organizations increase patient satisfaction and gain market share.
The new price transparency requirements are an opportunity for providers to promote their value in a way that consumers want. Healthcare organizations can benefit from going through the exercise of thinking like a market disruptor such as Amazon or Netflix. Ask the question, “What are we great at, and how can we share this information with our consumers so they’ll choose us for their care?” Revenue integrity teams can help identify this information, thus helping patients understand the full value they’re getting for their care.
Posting consumer-friendly, online pricing information is a major step to achieving price transparency, but it shouldn’t be the only step. Be sure to leverage the right technology and processes in your quest to facilitate price transparency. In addition, engage with patients to ensure you’re providing the information they seek. Given the importance of next-generation price transparency, you’ll want to partner with an organization with proven results regarding improvements in patient satisfaction, engagement, and net promoter score. Providing an excellent financial experience and sharing the pricing information patients want can help you stay competitive and thrive in an exceedingly competitive market.
About the author
Harrington is vice president of commercial products at R1 RCM in Chicago.
The views and opinions expressed in this article are those of the author and do not reflect those of HCPro, NAHRI, or any of its subsidiaries.