This document discusses the importance of price transparency in healthcare. It notes that the Affordable Care Act requires hospitals to publicly report their prices. With more consumers enrolled in high-deductible health plans, hospitals need to provide price information to engage cost-conscious consumers and avoid losing business to lower-cost alternatives. The document outlines challenges to price transparency like complex pricing structures and a lack of regulations. It provides recommendations for hospitals to establish price transparency, including forming a task force, building a business case, ensuring organizational readiness, and training staff to discuss prices.
3. Compliance with ACA Requirements
• Affordable Care Act’s Pricing Transparency Requirements
– ACA requires hospitals to report annually and make public a
list of hospital charges for items and services
• May 2014, CMS published Inpatient Prospective Payment
System (IPPS) rule proposal
– Hospitals will be required to disclose a standard list price
for all medical services they provide, OR
– Furnish those charges upon a patient’s request
– CMS encourages hospitals “to undertake efforts to engage
in consumer‐friendly communication of their charges”
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4. Healthcare Consumerism
The Centers for Disease Control (CDC) released estimates of
health insurance coverage – the results are interesting. 7
Private Coverage
Public Coverage
Unisured more than a year
U i d t f
Adults aged 18‐64
Children Under 18
0 10 20 30 40 50 60 70
Unisured part of year
Uninsured
7. Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey January – March 2103, CDC
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5. Healthcare Consumerism
Consumers are selecting High‐Deductible Plans. 7
Year Employment
‐based
Directly
purchased
70.00%
2008 17.5% 44.7% 60.00%
50.00%
2009 20.2% 46.9%
40.00%
2010 23.2% 48.0%
30.00%
2011 26.9% 52.4%
20 00%
Employment‐based
Directly purchased
2012 29.2% 54.7%
2013
(Jan‐Mar)
20.00%
10.00%
30.3% 57.8% 0.00%
2008 2009 2010 2011 2012 2013 (Jan‐Mar)
7. Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey January – March 2103, CDC
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6. Healthcare Consumerism
And a large percent have plans without an HSA. 7
25
20
15
10
CDHP (HDHP with HSA)
5
0
2008 2009 2010 2011 2012 2013
HDHP (no HSA)
7. Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey January – March 2103, CDC
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7. Healthcare Consumerism, Continued
• 85% of employers have already implemented or are
considering an increase in employee g p y cost sharing over the next
three (3) years 1
– High deductible plans are creating “shoppers” that are
price sensitive
• Families in high‐deductible plans use fewer brand name drugs,
use lower‐cost care venues, and visit doctors less frequently
• Price variation is expected to be a key driver of choice for
services that fall within the range of most health insurance
deductibles 2
1 P CH lthR hI tit t M di l tt d B hi d th b 2015
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1. PwC Health Research Institute, Medical cost trend: Behind the numbers 2. HFMA: Understanding At‐Risk Revenue Due to Healthcare Consumerism
8. Healthcare Consumerism, Continued
We know that patients in High Deductible Plans (with
an HSA) spend less on services. 8
2007 2008 2009 2010
Total ‐25% ‐8% ‐4% ‐6%
Inpatient ‐33% 6% 30% 11%
Emergency ‐17% ‐8% 8% 5%
Outpatient hospital,
ambulatory, and surgical ‐13% 2% ‐7% ‐12%
Outpatient, physicians office ‐14% 1% 4% 5%
Substance Abuse and Mental ‐22% ‐12% 2% 0%
Laboratory ‐36% ‐21% ‐20% ‐19%
Pharmacy ‐32% ‐26% ‐26% ‐20%
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8. Health Care Spending after Adopting a Full‐Replacement, High‐Deductible Health Plan with a Health
Savings Account: A Five Year Study, Employee Benefit Research Institute July 2013
9. We Need to be the Patient’s Advocate
• Patients don’t understand charges.
– According to the g IPPS proposed rule, hospitals need to
share their charges but not their actual payments
• Example:
Service Hospital Free‐Standing Imaging Center
MRI $2,100 $800
• Patients don’t understand charges versus out‐of‐pocket
• Patients don’t understand quality and value differences
• But WHICH do you think they’’ll pick?
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10. Can You Afford to Lose Even One Patient….
• Because they are concerned about their out‐of‐pocket cost?
– This is a big deal to employers and patients
– Those hospitals that achieve price transparency AND help
patients with the financial portion of their stay will earn
their trust
o And earn their business!
• And we need to face the fact that some healthcare services
are now viewed as a commodity.
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11. So, Why are Providers Resistant
to Price Transparency?
12. No Clear Regulations Exist
• Most states receive a failing grade on price transparency
regulations 3
– But that is changing.
• Example: North Carolina’s “Healthcare Cost Reduction
and Transparency Act of 2013”
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3. Catalyst for Payment Reform: 50 State Report Card on Price Transparency Laws 2014
13. Unraveling the Charge Structure is Difficult
Who can forget the Time article, Bitter Pill?
• Hospitals have:
– Inconsistent pricing within the
hospital’s department let alone across
the system
– Used strategic pricing to improve
reimbursement
– Bundle services differently
– Successfully confused patients and
regulators
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14. And Let’s Face It….
This is hard.
• Complexity of physician decision making
• Charge Description Master
• Pricing policies and strategies
• Self pay policies
• Charity care policies
• Financial counseling processes
• Out of pocket estimation
• Refund policies
• A trained, educated and motivated staff
• Organizational support
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16. We Need to Start with a Task Force!
• Identify the team.
– Executive Sponsor
– Revenue Cycle
– Financial Analyst
– Managed Care
– Physician Champion
• Keep it simple.
– Too many team members will prevent progress.
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17. Establish Guiding Principles
Consider using AHA’s Principles for Price Transparency 4 that
calls for information to be presented in a way that is:
• Easy to access, understand and use
• Creates common definitions and language describing
hospital pricing
• Explains how and why the price of patient care varies
• Encourages patients to include price as just one factor
• Directs patients to more information on financial
counseling
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4. Hospital Price Transparency, American Hospital Association March 2014
18. Build the Business Case
What services are at risk? Meaning, which ones are considered
a commodity?
• Imaging
• Colonoscopies
• Laboratory tests
• Pharmacy
• Rehab services
• Emergency
Determine your market’s shift to high‐deductible plans.
•• Some are more aggressive than others
• But according to PwC’s research, 85% of employers will be
increasing employee cost sharing over the next three (3)
years
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19. Build the Business Case (continued)
How do we determine the potential lost revenue?
• Data is limited on how consumers behavior will change
• But we can use information from the RAND Health
Insurance Experiment
– Regardless of income group, employees who selected a
high‐deductible plan used 25‐30% less services 5
– So, let’s assume that up to 30% of your “commodity”
revenue is “at‐risk” of shifting to a lower cost alternative
Are we concerned yet?
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5. Consumer Directed Health Plans and the RAND Health Insurance Experiment, J. P. Newhouse
20. Now, Let’s Look at Organizational Readiness
The Charge Description Master
• Before we can have price transparency, we need price
consistency.
– Start with price consistency within your organization.
o Within departments
o Across departments
o Across entities
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21. Organizational Readiness, Continued
Determine how your consumers will access information.
•• Website?
• Inquiry?
Regardless of how you choose to make information available,
make sure patients can find it easily!
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22. What Tools Can Support Price Transparency?
It all depends on how you define price transparency.
• Access to charges
– Is relatively simple
o But it’s not what patients want!
• Access to out‐of‐pocket (insured
and uninsured)
– Health Plans websites
– Patient payment estimator tools
o 44% of Americans would
welcome a pricing tool to
help them compare services 6
– Easy to use website
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6. Deloitte 2012 Survey of U.S. Health Care Consumers
23. Don’t Forget Policies & Processes
Policies that you’ll need to have or update:
• Discounts to Uninsured Patients
• Discounts to Underinsured Patients
– Establishing financial need guidelines
• Charity Care
• Bad Debt
• Medicare Bad Debt
• Refund Policies
– Medicare
– Patients
• Price Transparency
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24. Policies & Processes (continued)
Processes that you need to have or update:
• Financial Counseling
– Beyond Charity Care Application!
o How can you help patients pay you
– Integrating the Health Insurance Exchanges into your
processes
• Out of Pocket Estimation
• Point of Service Collection
• Patient Access Accuracy
• Eligibility
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25. Training and Scripts are Essential
Price Transparency is a difficult message to deliver.
• Consider scripting for:
– Your organization’s commitment to price transparency
– Out‐of‐pocket estimation disclaimers
– Commitment to help patients with their patient
portions
– Value and Branding
o Remember, it’s more than price!
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26. Closing Thoughts
After you have your business case, consider piloting in one area.
• The pilot should be in a high volume area
– You can get feedback quicker
– Consider having a patient focus group
• All the stakeholders need to be included
• Share the results of the pilot
– And don’t be afraid to highlight what didn’t work as
expected
And once you’re ready, have an Outreach Strategy.
• This could be a market differentiator – use it!
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28. For Information:
For more information on how Windham Brannon can help you
with your Price Transparency Strategy and Implementation,
please contact:
Valerie F. Barckhoff
Principal, Advisory Services
Direct: 678.510.2838
@vbarckhoff
vbarckhoff@windhambrannon.com
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29. Windham Brannon
Windham Brannon is proud to provide tax, audit, accounting and
advisory services to y the healthcare community. As a recognized
leader in Atlanta and the Southeast since 1957, we are known for
our technical expertise and commitment to the highest level of
service. Our healthcare clients find a more proactive approach,
more attention to their priorities, and more investment in their
relationship with us to ensure their needs are anticipated – and
met with confidence.
Contact information:
3630 Peachtree Road NE, Suite 600
Atlanta, Georgia 30326
404.898.2000 | windhambrannon.com
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