This year, hospital price transparency took a front seat after CMS issued a new set of rules and requirements. While they haven’t been written into law just yet, these rules will help set a framework for the kinds of requirements that are likely to become standard soon. With that in mind, now is the time to begin preparing for the inevitable. Creating a proactive response to the new changes as well as the evolving competitive environment and expected a response from consumers is essential for future success.
Of course, before diving into a new game plan, it is important to understand exactly what the new rules are and what they’ll accomplish.
Big-Picture Takeaways
– The ruling will provide a higher level of detail on pricing information which means explicitly listing gross charges, payer-specific negotiated charges, as well as all individual items and services. When a standard charge has been established for any service, that charge must be shared.
– It will be important for hospitals to understand their competitive pricing environment given the need for a consumer-friendly display of “shoppable services.” Patients will now have the opportunity to select with the option that makes the most sense for them financially, upping competition among hospitals.
– Data accuracy will play an even bigger role in the future given that hospitals will be required to update pricing information annually – at a minimum.
– In the case of non-compliance, hospitals will need to provide a “corrective action plan,” similar to what is required via HIPAA, in addition to paying per diem monetary penalties. These fees alone make it essential to remain compliant.
While hospitals need to consider several changes, one clear next step is making sure chargemaster data is being kept up-to-date in an increasingly competitive environment. It is important for hospitals to understand how they stack up against competitors and then make adjustments to ensure they are putting their best foot forward. The ability to query and explore pricing data will provide a competitive advantage for hospitals, so investing in the right chargemaster solution is vital.
So, what are the steps hospitals can take to respond to these changes?
The first big step toward transparency is accuracy. With the new rules, it is more important than ever to ensure chargemaster data is complete – however, there is some debate as to how “completeness” is defined. While most hospitals have data, completeness, in a consolidated environment, should require that data be organized. A truly complete chargemaster contains a comprehensive set of the hospital’s charge data and makes that data accessible.
Often times the accuracy is dependent on being able to capture all charge data in one database. The goal should be a uniform interface and a fully integrated workflow that makes it easy to view and work with all the data. Many hospitals still deal with data-reassembly routines and spreadsheets which leave a lot of room for error. Also, doing a thorough competitive analysis in a patchwork environment has the potential to be very expensive as they often rely on IT resources whenever regulations change.
With the new ruling comes the need to review pricing on a more frequent basis. Hospitals should begin to prepare for a more aggressive regulatory stance by making sure they are set up to review pricing more easily. Annually and bi-annually won’t fly moving forward, so it’ll be important to make sure hospitals can easily review on a quarterly or even monthly basis.
Look for chargemaster solutions and other tools that allow for focused reviews, enabling the hospital to review areas known to have undergone change. The more often it is reviewed the less of an overhaul – and headache – it’ll be when mandatory. Another plus? It’ll help hospitals keep an eye on how they compare to competitors, which brings us to the next step: competitive intelligence.
Competitive intelligence encompasses insight about pricing and how each hospital fits into the overall picture within a specific area. With an available list of “shopping services” from every hospital on hand, consumers will be more price-conscious when looking for medical services – something hospitals need to consider before developing a pricing strategy. It’ll be important for hospitals to compare pricing more broadly with as much data as possible to decide on a strategy.
Hospitals should also consider analyzing this data on their own using the following key indexes:
– Weighted peer hospital averages
– State averages
– Hospital bed size averages
– Urban vs. rural averages
– National percentile data (i.e. 10th, 25th 50th 75th, 90th percentile)
– Teaching facility vs. non-teaching averages
– APC and Medicare fee schedule amounts
– CBSA (regional) averages
Hospitals can compare their stats as long as their payer fee schedule amounts are updated in a CDM tool. Adding specific revenue and usage files can help narrow the analysis further allowing hospitals to map out exactly how they compare to peers.
Get Ahead of the Curve
Price transparency will surely redefine the current competitive landscape, but getting ahead of it can better position your hospital for success. Whether these new rules are enacted or not, competition is on the rise and consumers are more price-conscious than ever. Over the next year, hospitals need to focus on improving their ability to understand their own data, how they can operationalize that insight, and from there, continuously measure the effects of their actions and adjust accordingly.
About Tara Bradley, Chief Operating Officer at Vitalware
Tara Bradley is the Chief Operating Officer at Vitalware, a mid-cycle revenue SaaS solutions provider, specializing in Health-IT applications aimed at making the business of healthcare easier through its intuitive cloud-based technologies and regulatory content expertise.
Tara is a seasoned healthcare IT operations veteran and a trusted client advocate. She brings more than 15 years of experience working with healthcare organizations, from implementation and support to product development and delivery, helping clients establish best practices to make the client experience consistent and predictable.
