Commercial risk will be a critical catalyst of progress – it’s complicated, but is it possible? We think so.

Blog Post

How to respond to CMS' new price transparency tool for Medicare patients, in 3 steps

February 26, 2019

    CMS announced its Procedure Price Lookup tool in late 2018 to help Medicare patients make their health care decisions by improving price transparency. The tool displays average costs of select procedures in ambulatory surgical centers (ASCs) and hospital outpatient departments (HOPDs) for Medicare patients.

    How hospitals are boosting price transparency—and 4 ways you can do better

    To look up a price estimate, however, a patient would have to know his or her specific procedure code—simply looking up "colonoscopy" in the tool returns 32 search results. This means the tool is not accessible to the average consumer.

    CMS' tool could, however, be more useful for referring providers. Primary care providers, who are increasingly trying to factor cost to their patients into referral decisions to keep their patients happy, can use the tool to understand the magnitude of cost differences of the same procedures conducted in ASCs versus HOPDs.

    Here are three things to consider when planning your organization's response to CMS' Procedure Price Lookup tool.

    1. Don't rely on this tool to check your 'price transparency' box.

    You need to do more than count on Procedure Price Lookup or a posted list of top charges to win price-conscious consumers. Shoppers want an estimate of what they personally will owe out-of-pocket. This means you may need to invest in a central pricing office or robust online calculator to provide consumers with meaningful, customized estimates that account for their insurance and site of care.

    2. Defend the value of your HOPD to referring providers, and re-evaluate your ambulatory footprint.

    With referring physicians better able to understand the cost differential between and ASC and a HOPD, Procedure Price Lookup may further expedite the shift of volumes to the outpatient setting and away from the hospital. If you don't have an ASC to capture outmigrating volumes, it may be time to evaluate investment in or partnership with an ASC. And as HOPD volumes become more vulnerable, your physician liaisons and business development strategy may benefit from efforts to market the overall value of your HOPD to referring physicians.

    3. Stay ahead of CMS' sustained efforts to give consumers pricing information.

    Seema Verma and Alex Azar have clearly demonstrated that CMS is committed to improving price transparency for patients. That means the current iteration of Procedure Price Lookup likely isn't the last push we'll see from CMS. The tool itself has room for improvements—it currently displays national averages, not actual costs or even market variations, to the patient. Additionally, it does not take physician fees or the Medicare Advantage Plan into account. Look for CMS or a third-party partner to continue iterating on the tool—and get out ahead of their efforts so you can control the narrative around your value instead of playing a responsive game of catch-up.  


    Have a Question?


    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.