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January 14, 2019

What's the cost of a 'COMPNT ARTC UNI 8X3MM'? (If you're baffled, you're not alone.)

Daily Briefing

    By Jackie Kimmell, Senior Analyst

    CMS' new price transparency rule which mandates that hospitals price their list of standard charges online took effect on January 1st—and the initial data paint a confusing picture for patients.

    The new price transparency rule, finalized as part of the IPPS final rule in August, has attracted widespread attention. Many hospital leaders have commented on the confusing nature of the charges, while journalists have begun scouring hospital websites to see how the prices in their local market compare. 

    Most of the national coverage has made the same main point that three of our Advisory Board experts made when we spoke to them about the rule last month: Just posting standard charges online isn't likely to lead to any significant changes in patient-centered price transparency. These charges are not usually reflective of actual costs or reimbursements, and vary widely based on patients' insurance and deductibles. As such, patients seeing them might actually become more confused about what they owe.

    Yet reviewing the coverage also illuminates several key differences in both how providers have been responding to the rule and hints into how it may evolve. Here are some of the responses and developments you should know about.

    Providers so far have complied in very different ways

    Scan several hospital websites and you'll see they've taken many different approaches to the rule. For instance, Modern Healthcare reported that Northwestern Memorial Hospital in Chicago posted a link to the charges right on their home page (albeit at the bottom), while HCA Aventura Hospital and Medical Center posted a link to an Excel file of their charges about five clicks away from their home page, filed under their "Patients & Visitors" tab (along with a message urging patients to call their pricing hotline for information "most helpful and specific to your circumstances.")

    Others have either not yet posted the information or been less direct. Medstar Health system said it wouldn't post the information until at least a week into 2019 to have time to ensure the prices posted are clear and accurate. Sutter Health, meanwhile, posted its list in a .json file that drew ire on Twitter from D.J. Patil, the former US Chief Data Scientist, for being incomprehensible. That said, it's worth noting that the hospital's website already has a patient-aimed online cost estimator tool on their website.

    Many providers have posted lengthy disclaimers alongside the new pricing information warning patients about the data's limitations—and in some cases, hospitals are  requiring patients to virtually sign a disclaimer to access the prices or click buttons acknowledging their understanding that the prices are estimates and accept the possibility of surprise billing. For instance, on Bon Secours Health System's site, under the tab "Expand to View Pricing Lists," users must "accept [the] link" after reading a "End User Point and Click Agreement," an "AMA Disclaimer of Warranties and Liabilities," and an explanation of pay estimates and surprise billing.

    What do the list prices show?

    Once patients get past the acknowledgments and waivers, things rarely get much clearer. News outlets across the country have begun investigating the differences between their local hospitals—some with startling differences. The Mercury News in California's Bay Area, for instance, reported that a single chest x-ray at Oakland's Highland Hospital is listed at $131, while one at the University of San Francisco Medical Center is listed at $2,618.

    In Tennessee, the Mufreesboro Post reports that Saint Thomas Hospital in Tennessee charges $203.40 for a routine electroencephalography (EEG) while a longer scan up to one hour is listed at $347.10. Meanwhile, at nearby Vanderbilt University Medical Center, the price of an EEG is listed between $1,040 and $16,874.

    While the price differences in some cases are stark, the differences—and the sheer amount of data—can be hard to understand. For example, many of the newly chargemaster files contain tens of thousands of prices and it's not always clear what the listings are and which ones the patient would actually be charged for.

    A Kaiser Health News story that was picked up by CNN and other news outlets across the country, compared an "uncomplicated vaginal delivery" at Cleveland Clinic listed at $3,466 to Mayo Clinic's two listings of "labor and delivery level 1 short," listed at $3,060, and "vaginal delivery level 2 long," listed at $5,236. The difference between these levels and lengths, they note, is unclear.

    Plus, without a standard definition for the terms hospitals use in their posted prices, listings like COMPNT ARTC UNI 8X3MM at Good Samaritan hospital (listed at $122,007) aren't easy to parse. Others, like a charge for LAY CLOS HND/FT=<2.5CM at Sentara Healthcare in Virginia was highlighted as specifically confusing by Kaiser Health News. The charge? $307 for a small suture in surgery.

    The New York Times asked 41-year-old Virginia resident Sara Stovall what she thought after reading the chargemaster lists from Sentara and other local hospitals. She responded: "This is gibberish, totally meaningless, a foreign language to me… I can't imagine how I would go about making this useful." The newspaper posted the article exploring the rule today with the tongue-in-cheek headline that "it may take a brain surgeon" to decipher the new charges.

    Other outlets have found that there are often duplicate charges on the chargemasters. For instance, the Mercury News reported that Lucile Packard Children's Hospital lists three separate entries for a 325 mg aspirin tablet, two for $100 and a third for $1.40. A spokesperson said the correct price is closer to $1.

    Verma indicates desire to expand enforcement, lauds health systems for going above and beyond

    This confusion would likely be allayed by a standard manner that, or system under which, the charges must be reported—though it remains unclear if CMS plans to mandate a more standardized approach.

    Michele Muse, director of health information management at Boston-based Tufts Medical Center, said that hospitals needed additional guidance from CMS to publish their chargemasters "in a uniform fashion from the patient's perspective."

    However, CMS Administrator Seema Verma on a press call last week said this "initiative was really a first step" for greater transparency and shared her hope that providers would take up the mantle with their own efforts.

    Verma specifically lauded three health systems for their price transparency efforts: UCHealth in Colorado, Mayo Clinic in Minnesota, and the University of Utah Health.

    None of these hospitals built their patient price transparency tools specifically in response to the law. UCHealth launched their patient price estimation portal last year for five of its 10 hospitals (with more locations to be added at the end of this quarter). Their tool provides an estimation of out-of-pocket costs for 150 common services after patients input details about their health plan. Mayo Clinic and the University of Utah Health have had their price estimation tools for the past four and two years, respectively.

    Experts have said more advanced and actionable tools are what's actually necessary for patients to begin using price information in their health care decisions.

    But for now it seems like CMS' next step is just making sure that hospitals and health systems have uploaded the price lists. This enforcement, as Advisory Board's Kenna Hawes said last month, is likely necessary for any future regulatory action to have meaningful impact on provider behavior.

    Verma laid the groundwork for greater enforcement in a FAQ she posted about the rule in the fall. The note clarified that a hospital that does not post its charges "will not be in compliance with the law" and "specific additional future enforcement or other actions that we may take with the guidelines will be addressed in future rulemaking." Then, on the call last week, she noted that the agency will use the feedback it receives from a future request for information to determine the best mechanisms to confirm that hospitals are complying. She did not give a specific timeline on when these changes would occur.

    However, regardless of whether CMS steps up their enforcement, providers shouldn't wait for the agency in moving towards greater price transparency, says Advisory Board's Robin Brand. Rather, she notes that there's a clear financial benefit to providers from investing in consumer-friendly tools. According to Brand, "having patients understand their financial responsibility is an essential component of the modern revenue cycle. This is not a fluffy consumer experience thing, this is whether or not we get paid." She added, "I think there is a pretty sophisticated way to do this, and people are starting to think strategically about how to support financial navigators and how to build careers for them in the organization." She hopes this requirement will spur provider action on this front.

    Learn more: How your organization can advance price transparency

    Want to learn what over 1,000 patients who had recently undergone non-emergency surgery told us about their financial experience and preferences? If you're a Revenue Cycle Advancement Center member, download our research note from Q4 2018 to learn more.

    Not a Revenue Cycle member but want to prepare for the future of price transparency? Make sure you download our other related research reports to learn:

    Follow the patient financial journey—from pre-care through billing and collections

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