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Readers Write: Time for Providers to Lead the Price Transparency Revolution

March 23, 2016 Readers Write 5 Comments

Time for Providers to Lead the Price Transparency Revolution
By Jay Deady

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With ICD-10 in the rear-view mirror, providers now face a new challenge – answering the public and media call for consumer price transparency. High-deductible plans now cover nearly a quarter of those Americans with commercial insurance, raising the ante on patient financial responsibility. Yet large numbers of patients remain confused about how much they will owe for hospital services—a full 36 percent, according to one survey.

This problem, unheard of in other consumer industries, not only endangers patient satisfaction scores, but threatens to increase the bad debt load of organizations already struggling with severely low margins.

While insurance companies and employers have deployed some pricing tools, they have done a poor job of accurately representing multiple providers’ fees within a geographic area. New technologies are available from a handful of companies that let providers take the price transparency bull by the horns and lead themselves.

These technologies transcend the usual approach of mere compliance with a state’s price transparency laws. Posting a list of charges on a provider’s website may satisfy the letter of the law, but it fails to give consumers an accurate picture of what they will owe for services. Knowing this, providers have struggled to come up with an alternative that does not reveal proprietary information to their competitors. Most have concluded there is no way for them to easily accomplish this and they refer questions to patients’ insurance companies.

But it turns out the path to truly efficient, accurate, and accessible price transparency is one that healthcare consumers can take themselves—directly from the provider’s website.

Healthcare consumers want – and deserve – an accurate understanding of what they will owe for services before they are rendered. The operative word here is “accurate”—as in an estimate based on the consumer’s current levels of insurance coverage. Or, in the case of a self-pay patient, an estimate based on the provider’s discounted fees for consumers that pay fully out of pocket.

Either way, with self-service pricing, healthcare consumers generate the estimates themselves, typically from an online calculator on the provider’s website. The process is quick and hassle-free. A consumer simply inputs their name, insurance plan number, and perhaps two or three more data elements. Within 10 to 45 seconds, a complete and accurate estimate appears, giving consumers immediate, line-item insight into what they will owe.

The process is powered by rules-based engines that automatically query, retrieve, and combine data from payer portals with the hospital’s charge master data and payer contracts. Analytics plays a critical role in assuring the estimate is accurate, including analysis of previously adjudicated claims to identify variances.

Such a tool neatly solves one of the most persistent challenges with implementing price transparency: the pitfalls of making proprietary financial information public. As a provider-facing solution, and because patient-unique information needs to be entered to generate an estimate, not just anyone can use the calculators. This is vastly preferable to putting a list of total charges or paid amounts out there for all competitors to see, which neither reflects negotiated rates with payers or the patient’s accurate out-of-pocket costs.

At the same time, self-service price calculators appeal to today’s information-driven patients and nicely align with how they already seek pricing on other purchases, from airfare to mortgages.

One of the most promising advantages of a self-service price calculator is its potential to engage consumers in multiple ways. After generating a price estimate, for example, the calculator could prompt high-deductible and self-pay consumers to view payment plan options. It could even engage those patients with concerns about their ability to pay and schedule time with a financial counselor. Realistically, we can only expect such concerns to grow along with the increasing number of high-deductible health plans. Since these plans were introduced in 2006, they have increased from 4 percent to a whopping 24 percent.

A deductible payment and co-insurance spread out over a year, or whatever the time span the provider and patient agree on, is clearly more manageable than a lump sum payment. Armed with clear, accurate information about how much they will pay—and how—healthcare consumers can better plan for paying their medical bills. This in turn will help reduce a hospital’s bad debt or charity write-offs.

Most important, patients who clearly understand their financial responsibility are more likely to schedule rather than delay urgently needed care. This reason, above all others, is why providers would be wise to take control of the price transparency issue now.

Jay Deady is CEO of Recondo of Greenwood Village, CO.

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Currently there are "5 comments" on this Article:

  1. Price transparency…what a wonderful concept.
    Heck I know exactly what it will cost when I bring my car in for a major repair. Or do I? If there is a ‘”complication or co-morbidity” such as “we think the fuel injector is part of the problem in addition to the oxygen sensor we first identified” …so your cost will now be…

    Fact is for primary care and many standard surgical procedures like hip replacement (baring a complication) price transparency could work. But that is only 50% or less of the care given at a hospital. What happens when a patient comes in with abdominal pain and after two days of dozens of diagnostic tests and a bill bill we still do not have a diagnosis?? How would /could we give a give a reasonable estimate for that and whatever procedures might follow??

    When my car has a problem the techs have libraries of trouble shooting guides to help, design documents, diagnostic tools developed by the original manufacturer and more. Fantastic documentation all critical in identifying the problem and arriving at a ‘price’ to fix it.

    When you came off the maternity assembly line didn’t your creator deposit your complete set of documentation with your parents? Oh, they forgot to bring them home you say? Well it’s no wonder your provider can’t give you a reasonable estimate for your current abdominal problem.

    Price transparency, great idea, but for most serious healthcare issues impossible to deliver accurately.

  2. I take your point FLPoggio, but to be devil’s advocate, Veterinarians have been modeling price-transparency for us pretty well for a a number of years. Most vets I’ve taken my pets to can give an itemized estimate that more often than not will be pretty darned accurate before rendering service. Certainly the human organism is more complex than a cat or a dog, but I do think there’s a lot of room for improvement in the direction of more transparency.

  3. @FLPoggio – here is how I understand it:

    The correlation between the mechanic and physician seem to be that every car/person problem is unique and since the consumer and seller do not know the actual product needed until a consumer-seller relationship has already been established then there is little use of actual price transparency – you are going to be getting the car fixed/body fixed and while you can estimate what needs to be fixed in the course of fixing something, something else may prove to be wrong and at that point you are locked in with that seller-buyer relationship. So basically, you are going to pay the fee and the whole idea of a price is irrelevant because there is no true marketplace, just an interest on the mechanic/physician/payor not to rip you off too much where they lose you as a customer some time down the road when you need service again. Is that correct? Which pieces am I missing?

  4. Thanks to all that took the time to read my article and especially to those above that commented on the topic. I agree with FLPoggio that complex surgeries can’t be accurately estimated in advance due to variability of the final procedures performed, physician/mechanic preferences of trays and materials, etc. That said, here at Recondo with 7 years of experience and producing over 9 million patient estimates a year, the vast majority of estimates produced for an IDN client, or calls received to their “price shopping lines” are in a group of the 150 most common procedures, which make up between 50 to 70 percent of the procedure volume of that IDN. The advantage to the patient for financial planning purposes and to the provider for reducing “no-shows” and reduced bad debt are well documented. This new evolution is to simply provide these tools and info direct to the consumer/patient and as Mobile Man points out, if we can start with 50 to 70 percent of the procedure volumes, then why not?







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