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Hospital Price Transparency: How to Comply in 2021

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In 2019, President Trump issued an executive order expanding on the previous price transparency measures for healthcare providers. The new mandate goes into effect on January 1, 2021, with a $300 per day penalty attached for non-compliance.

The new price transparency rules were contested in the courts, with the American Hospital Association and others joining a lawsuit filed to block portions of the rule based on First Amendment protections. But this challenge was unsuccessful, so it appears the rule will go into effect as written in 2021. Hospitals who want to avoid financial penalties will want to prepare and have a strategic plan in place to comply with the mandate.

Beyond the chargemaster display mandated in 2019, we believe it’s a wise move for hospitals to also prepare to now share the following information with their prospective patients:

  • Gross charges defined as your chargemaster price or total claim charges
  • Min and max procedure charges for all service packages, including bundled charges, based on claims data
  • Min and max charges for individual items and services based on claims data
  • Discounted cash price defined as your private pay patient charge
  • “Shoppable services” using volume of claims to determine most frequent procedures
  • De-identified minimum and maximum payer allowed charges
  • Allowed charges for each contracted payer plan

HOW HOSPITALS CAN PREPARE

The first big step toward competing in a transparent-pricing marketplace is accuracy, and with the new granularity and detail in the proposed regulations, completeness of chargemaster data is going to be key.

Your data being current is more important than ever. Not long ago, hospitals would review prices on a yearly basis at most. With the right chargemaster tool-set, increasing the pace of review can be done much more easily, because that review can be focused on areas known to have undergone change. It's not unlike keeping any dataset (or even a physical space) clean and tidy: the more often you clean it, the smaller the job, and the easier it is to stay on top of it.

Know Thyself…and Thy Competitors

Sound decisions about pricing begin with assembling a clear picture of your own pricing across the full spectrum of services your facility offers. But transparency opens up an entirely new competitive landscape, and makes deeper awareness of peer pricing an imperative for every hospital.

“Awareness” isn’t quite enough though. What’s really needed is competitive intelligence. Benchmarking analysis provides actionable insight about pricing and how your own facility fits into the overall picture within your locality, region, or in relation to similar-sized hospitals.

It's also reasonable to assume that any snapshot taken will also be subject to change, as greater pricing transparency is likely to have an effect on both consumer behavior and market reaction. A readily available list of "shoppable services" from every hospital might well lead to…more shopping. And though it’s not very common now, that doesn’t mean it won’t be.

A Recommended Path for Developing Competitive Intelligence

In general, the broader the range of comparison, and the richer (and more current) the datasets you consult for competitive information, the more effective your analysis will be.

As you're no doubt aware, the SAF (Standard Analytical File) available from Medicare is one of the most reliable datasets available, which is why it's a great place to start. It’s published on a quarterly basis and contains data from 93% of the paid claims by Medicare.

To make optimal use of this information, and make the most informed decisions for each CPT/HCPCS, consider analyzing this data 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

To bring your own hospital into this broader analytical picture, you'll need to have your payer fee schedules in your CDM tool (not just one or two, but all of them), and line them up against all of the indexes listed above. By adding your revenue and usage files for a selected period of time, your analysis can be even more valuable. This is the kind of thorough analysis that rises above a simple price-check — it can truly be called "competitive intelligence."

Becoming Self-Sufficient With Competitive Analysis

Of course, there are consulting firms who offer this kind of analysis, but having someone else do this for you on a continuous basis will become expensive.

There are a few key tactical capabilities your chargemaster and your revenue cycle team need in order to perform this kind of analysis regularly. Our own products, VitalCDM and VitalKnowledge, are designed to make these recommended actions flow smoothly:

  • Import your entire CDM file and any ancillary files, including ALL payer fee schedules
  • Import ALL revenue and usage for analysis, for ANY specified time period
  • Select ANY or ALL of the data elements from the SAF data to analyze against your charges
  • Display and save all of this data — including payer fee schedule amounts, onto a single, easy-to-use "Pricing Analysis Report"
  • Yes, you can also export this data for further analysis and manipulation
  • For audits: you can store the results of the reports, along with the data in versioned tables, so that you can go back to any date in the past, and interrogate and display your pricing
  • You can also access CPT/HCPCS codes not currently listed in your hospital's CDM file, to enable future comparison in the case of changes

By making this kind of analysis a regular part of your chargemaster maintenance, you'll assure that the data you’re sharing with the public is putting your hospital’s “best foot forward” in the competitive marketplace.

HOSPITAL PRICE INDEX™

Vitalware’s Solution For Pricing Transparency Compliance

Vitalware's Hospital Price Index™ (HPI) has been extensively updated to help hospitals prepare for the new price transparency requirements for sharing your pricing information with patients.

Many hospitals and vendors have looked past the “all services” portion of the mandate as most of the focus has been placed on "shoppable items".

Many hospitals and vendors have looked past the “all services” portion of the mandate as most of the focus has been placed on "shoppable items". The updated regulation requires the public posting of your chargemaster, shoppable services, and all services. Make sure your strategy covers all portions of the rule.

Hospital Price Index provides all three distinct, but necessary, views in a single location:

  1. Chargemaster display with patient-friendly descriptions (rather than Google-friendly)
  2. All services display based on claims data for all service packages as well as for individual items and services
  3. Shoppable services are selected by you, based on the services you provide, from our library of 2,500+ pre-built service bundles

Here’s a high-level overview of how we’ll help you develop the displays above:

  • Scrub and display your chargemaster with patient-friendly descriptions
  • Utilize claims data to determine high/low procedure charges for all service packages, including bundled charges (e.g., drugs, supplies, anesthesia, recovery)
  • Utilize claims data to determine high/low charges for individual items and services
  • Display de-identified minimum and maximum payer allowed charges based on contract information
  • Display average allowed charges for each contracted payer
  • Provide a backend Admin System for overriding any displayed data and disclaimers
Editable Patient Communication

We'll also provide you with “white-labeled” communication that you can share with your patients, who will naturally have questions about the pricing information they'll see on your site. The editable handouts and web copy we provide can be tailored to your specific needs to help your patients understand exactly what they’re seeing, and how they can interpret that information.

Let Us Know How We Can Help

As noted, we stand ready to help our clients display information as intended, and moreover, we’re here to help you do the deeper analysis you may want to initiate to strengthen your competitive pricing.

Whatever form the final rules take in 2021 and beyond, we’re confident that building out the means to do a truly robust, time-fluid competitive analysis will pay your facility significant dividends in the near future.

Questions?

If you have any questions about the perspectives offered here, we'd love to hear from you. Use our live chat function or fill out the form on this page to get contacted.