In November 2019, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that requires that hospitals, healthcare providers and insurance companies openly disclose prices to patients. A federal judge backed this final rule, with an implementation date set for January 1, 2021. Although the date is quickly approaching, most hospitals need to start on focusing on getting their systems in check for the new rule specifications.
The new rule that will be enacted at the start of 2021 requires hospitals, providers and insurance companies to disclose the costs of services in a method that is simple to access for patients and that is easy to understand. The reason the rule aims to make the costs open and understandable is to make patient bills less confusing and that the actual out-of-pocket costs are upfront. The CMS stated that the rule is patient-driven and that costs must be transparent so patients can be more informed about what they might pay for hospital items and services. The transparency of the costs requires these organizations and providers to review their pricing and to back up their reasoning for setting their pricing methodologies.
As defined by the CMS, standard charges includes gross charges, discounted cash prices, payer-specific negotiated charge, de-identified minimum negotiated charges, and de-identified maximum negotiated charges. The CMS outlines two required ways for making public standard charges – one is through a comprehensive machine-readable file, which contains all five types of standard charges and can be integrated into electronic medical records and shared decision making tools. The other required method is a consumer-friendly shoppable services, which is a list of some types of standard charges for a limited set of “shoppable services” provided by the hospital. A full list of requirements set forth by the CMS can be found here.
Strategizing on a new pricing model and a method to easily deliver the pricing is different across the board. Although Medicare provides algorithms and methodologies for costs, charges, etc., most are not willing to rely on this due to the specific services they provide. One suggestion that consultants provide that may not be that suitable for many is the idea to compare their pricing to other hospitals. Not all hospitals are the same – in size, location, services – so this may not be ideal.
Besides pricing to consider, hospitals, providers and insurance companies are also pressed to ensure they run their operations in compliance with the final rule. Noncompliance with the pricing transparency rule results in penalties, but also diminishes their reputation and bonds with the communities they serve.
Although compliance with the rule is inevitable, it definitely comes with its hardships. For one, handling pricing strategy review and compliance requirements is definitely on the radar, but dealing with the COVID-19 pandemic is still a growing concern. Hospitals are hoping that the courts give more time or turn their decision, but many are still staying positive and working to strategize.
Read the original article from Healthcare Finance here.