A few weeks ago the media reported extensively on the CMS release of hospital price data. The coverage emphasizes the need for hospitals to provide meaningful price information to patients and communities. Joseph Fifer, HFMA president and CEO, noted, “For price information to be meaningful to patients, it should focus on a patient’s financial obligation—what that individual is expected to pay—and not merely charges.” (“Developing a Path to Price Transparency,” HFMA’s Healthcare Finance Strategies, June 26, 2013)
HFMA’s Strategies for Enhanced Price Transparency
HFMA has an ongoing project that focuses on developing a pricing system that 1) is simple to administer and communicate, 2) enhances the patient experience as patients take greater charge of healthcare purchasing decisions, and 3) gains consumer trust as they seek to compare hospital/healthcare service prices. As part of this project, HFMA has suggested five action steps for price transparency.
Develop a well-defined, rational and competitive pricing philosophy, strategy and structure.
Such a philosophy should guide policy decision-making, redesign and updates. Examine approaches that mitigate the impact of pricing changes under Medicare and Medicaid payments and regulations, and adopt a pricing strategy or discount policy that makes discounts available to patients with limited financial means. Ensure that the pricing system is simple to administer and communicate to various stakeholders, including members of the general public, and that the framework for the pricing system is rational and defensible in relation to objective benchmarks, such as cost and market price.
Develop formal, written policies and procedures for providing patients with written estimates of their expected financial obligations for both inpatient and outpatient care, and be clear about what the estimates do and do not cover.
Make one department responsible for these transactions. Gather financial information in advance about the patient and identify and assist patients who may qualify for charity care or government programs. When hospitals establish patients’ financial obligations for their hospital bills before treatment occurs, both the hospital and the patient benefit from the transparency.
Negotiate with insurers to remove contractual barriers to rational pricing methods. Achieving meaningful transformation of the hospital pricing system to facilitate price transparency is a vastly complex endeavor, requiring collaboration among providers, payers, government, employers and consumers. Posting a copy of the chargemaster does not provide a meaningful tool for patients (and others). Encourage payers to make available on a real-time, electronic basis information about coverage, benefits, non-covered services, copayments, and patients’ deductibles, coinsurance and maximum out-of-pocket obligations.
Enhance awareness and understanding of the need for greater price transparency among employees.
Ensure that staff knows how to help patients learn the estimated cost of inpatient and outpatient care within the organization as well as their estimated financial obligations for care and services received. Use scripts and role playing tailored to the needs of patients in different settings, such as emergency and outpatient departments, to train employees about how to communicate financial information.
Continually improve your organization’s cost-accounting competencies.
Invest in business intelligence and costing systems that enhance the organization’s ability to capture, track and analyze costs for specific procedures or processes such as costs related to labor, supplies and other expenses. Costing data should be accurate, timely, appropriate and reported in a useful manner. Then, use the data to support decision making related to establishing charges and improving value such that the relation to charge, cost and price is meaningful and understandable to the patient and community.
(“Developing a Path to Price Transparency,” HFMA’s Healthcare Finance Strategies, June 26, 2013)
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