On January 1, CMS implemented the Hospital Price Transparency final rule, but by July, it was clear that many hospitals were noncompliant. Even with a proposed rule for penalties, requirements still only fall on certain parts of the health care industry.
It’s well known among economists and health leaders alike that US health care spending remains incredibly high and continues to grow rapidly. Health care spending in the United States is projected to grow at an average annual rate of 5.4% over the next decade, outspending all other nations in health care as a percentage of gross domestic product (GDP). Yet when it comes to understanding the details of what we’re spending money on and providing patients with information about their share of costs to help them make value-based decisions in their health care, the answers are much less clear. There may be a lot of disparate data out there about factors influencing costs, but there is much less “actionable information” that patients or providers can use to inform care decisions and try to keep expenses lower where possible.
Even though healthcare is one of our most essential needs, the health industry’s pricing and patient expected contributions are often cloaked in secrecy. Rates negotiated between providers and insurers have traditionally been conducted behind closed doors. Currently, there is little public information to explain the wide variability in the prices for services, ranging from simple blood tests to complex surgeries, often those delivered in the same city by similar providers for the same payer. Also, patients who are out-of-network may face surprise bills and cash pay patients often pay off a percentage of unreasonable standard charges that do not reflect market rates.
CMS implemented the Hospital Price Transparency final rule to improve price transparency, which went into effect on January 1 of this year. Among many things, the rule required hospitals to post clear, accessible pricing information online about the items and services they provide. However, by July, it was clear that many hospitals were choosing to remain noncompliant, and an Executive Order and proposed rule for penalties were issued to add teeth to the new regulations. Even with efforts to strengthen the rule, the requirements still only fall on certain parts of the health care industry, providing a limited view of what other options consumers might have when identifying the highest quality care at the best value.
Outpatient surgery has taken on an increasingly important role in the context of the larger health system, particularly as the nation continues to battle the effects of COVID-19 on hospital intensive care unit (ICU) and staff capacity. While ambulatory surgery centers (ASCs) are currently exempt from the federal rule on price transparency, many states are implementing their own regulations for price transparency in these settings. For example, Indiana enacted a series of laws in 2020 that require ASCs to provide a good faith estimate of the cost of health care services. These requirements are good news not only for patients so they can be informed consumers, but they are also good news for ASCs that can more clearly demonstrate their value and become even more attractive as a preferred site of service for specific procedures.
The growing reliance on ASC services as a cost-effective and safe alternative to the hospital setting should encourage facilities to evaluate how to preemptively offer solutions for price transparency at the consumer level that align with and support the newly established regulations in the hospital side.
For this data to benefit patients and providers, the pricing and payment “menu” must be upfront and accessible. Health care facilities need to try to replicate how costs for services are communicated in other businesses. For example, car repair services or home remodeling companies do a diagnostic and develop a game plan for service and provide a clear cost estimate to the customer before they start working. Of course, there may be factors that cause adjustments, but the upfront information is organized in a way that consumers can easily compare similar services across potential contractors.
Many surgical business offices do attempt to calculate and communicate patient responsibility in advance. This is challenging because the data sources are not readily available or always reliable. To achieve the high level of accuracy needed surgery centers should adopt technology to calculate and communicate costs while avoiding information overload that could lead to patient misunderstandings of which information is relevant. The benefits of the right technology include improved staff efficiency, shifting dollars from postcare to preservice, compliance with state and federal laws, improved patient and surgeon satisfaction, and helping to drive the healthcare cost trajectory down by fostering competition, which will ultimately benefit the surgery center. New pending regulatory requirements on price transparency will help push this transformation and culture change faster.
In the context of COVID-19, we can expect case-type assignments and resource allocations between hospitals and ASCs to be more fluid than we have seen before. Before federal requirements catch up, taking steps to track and make price information available in the ASC setting will only further boost the industry’s reputation, demonstrate regulatory compliance, and make it easy to participate in the greater national move towards consumer transparency.
Scott Palmer, MBA, is senior vice president of Business Development of HST Pathways, a leader in cloud-based end-to-end technology solutions for outpatient surgery centers. Palmer was the founder and CEO of Clariti Health, which in June merged with HST Pathways.