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Price Transparency Pushes Forward in 2021

Calculator & Stethoscope

While consumers continue to demand greater value in healthcare, they have very little way of knowing if they’re getting it. That’s because healthcare (payers and providers) – full of its complexities, technical coding, billing practices, and claims adjudication – is one of the least transparent industries out there when it comes to pricing. Whether patients are planning to have a baby, considering knee replacement surgery, or want a simple imaging procedure, reviewing a “standard price” list isn’t something health care providers have traditionally made available to the public.

With this said, things are soon changing as lawmakers and consumer advocate groups push for greater transparency in healthcare. Mostly, these efforts have really fallen short of moving the needle and to date, have just added more confusion and frustration for both patients and providers. Some experts believe this all changes in 2021.  That’s because in June 2019, President Trump signed an executive order on Improving Price & Quality Transparency in American Healthcare to Put Patients First. The order’s “Final Rule” includes several regulations for hospitals to adhere to, all designed to promote competition and to help drive down the costs of care for consumers.

Effective January 1, 2021, the Final Rule will require hospitals to post charges and negotiated rates for at least 300 ‘shoppable’ services on their web site in a format that allows the public to comparison shop. Negotiated rates between payers and providers have always been proprietary – marking a major shakeup for the industry. “Shoppable Services” refers to those services that consumers can schedule for themselves, such as imaging tests, elective procedures, etc. However, due to the wide variability in insurance plans and coverage, this regulation is unlikely to have much impact on a patient’s understanding of their out-of-pocket expenses. To address these complexities, the order also calls on providers and payers to disclose out-of-pocket cost information before care is delivered – which is no easy feat for health systems with limited resources and shrinking margins.

Opposition Overruled

For the past 18 months, health systems have been working toward complying with these regulations – although many are doing their part to push back. Many hospital leaders have argued that the Final Rule is ‘arbitrary and meaningless’.  In some cases, legal experts have weighed in that the regulations may even be unlawful. Hospitals and health systems have rallied the American Hospital Association to fight against the Final Rule with no luck. Appeals made in both June and August have failed – and the 2021 deadline looms near.

Regardless of opposition, at this point the regulation is slated to take effect at the start of the new year, with heavy penalties of $300 per day for non-compliance – leaving health systems scrambling with how to publish and communicate this information in a meaningful way.

What This Means for the Revenue Cycle

At this point, the march toward transparency is inevitable. Even with all its challenges, providers and payers now recognize that consumerism in healthcare is an initiative that’s here to stay.  While achieving this transparency is a feat many will struggle to achieve, it’s not all doom and gloom. Being more transparent about health care costs can actually help improve the revenue cycle in some instances. That’s because when patients know what their costs will be up front, they’ll be more prepared to pay.

Fortunately, patient access and chargemaster revenue cycle management (RCM) vendors are tirelessly working to help providers adequately prepare to tackle the world of pricing transparency. Using the troves of data found in electronic medical records (EMR) systems paired with technologies such as machine learning, artificial intelligence, and robotic process automation – providers and payers can now do a better job of estimating costs for specific services.

These tools are already allowing many forward-thinking providers to start providing personalized estimates for patients up front – with a serious disclaimer that the estimate is just that – an estimate. The good news is that as technology evolves and organizations learn more about estimating, the accuracy can only improve. One can only assume that patients will appreciate this added service – providing a valuable differentiator for those systems that get it right.

In conclusion, as 2021 draws near, the Final Rule is certainly top of mind for every hospital and health system. While it’s a complicated step forward for executives and RCM leaders to navigate, those with the right tools, the right teams, and the right training all properly in place, can use price transparency to enhance the patient experience and to their competitive advantage.

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