The Devil’s in the Details of the New Hospital Price Transparency Rules

Raising sufficient general awareness of the new federal hospital price transparency rules set to take effect in just a little more than three months isn’t so much an issue anymore – industry leaders have been sounding alarm bells for much of the year, and even members of the public at large became well aware of the matter after the initial announcement generated plenty of national headlines in November 2019.

It’s more the crucial little details that seem to require a bit more attention.

That was the message when the featured guest on a recent edition of the popular Healthcare Financial Management Association (HFMA) Voices in Healthcare Finance podcast was Gregory M. Adams, Executive Vice President of Financial Services for Panacea Healthcare Solutions, former CFO and former Chair of the National HFMA, and a renowned national expert with more than 35 years of experience.

“It’s important to note there’s more than meets the eye in terms of the data requirements,” Adams said. “Hospitals may not be aware that the shoppable list is likely to include MS-DRG and same-day surgery procedures, and not simply the items listed in your chargemaster. The CMS (Centers for Medicare & Medicaid Services) list of 70 (services) includes DRGs, private outpatient tests, (and) outpatient surgery items and services, so as you can see, there’s a fair amount of information that needs to be provided by Jan. 1.”

While the new rules are thoroughly spelled out statutorily, Adams also advised that there are more than a few “gray areas” where what’s written, frankly, “may, in fact, not seem logical.” For example, he noted, hospitals are required to include in their pricing lists MS-DRG 470, a hip and knee replacement procedure that’s included in the CMS list of 70 items.

With regards to the Consumer Display requirements Adams further stated that “they (hospitals) must show not only the negotiated charge, but the de-identified lowest and highest negotiated charge. So we believe it would certainly be misleading to calculate and only show a consumer a minimum or maximum for those payers that pay specifically based on MS-DRG, when the rule requires that the shoppable item and DRG has to show the negotiated rate for all payers,” Adams explained. “So although it’s not specifically required in the final rule … in the interest of providing the consumer with the most meaningful information and (ensuring) that the displayed de-identified low and high negotiated charge or rate are comparable and inclusive mathematically, for all payers, our company will regroup all inpatient records into a MS-DRG. We’ll then calculate and display the negotiated reimbursement, regardless of the payment method.”

“What I mean by this is you have a variety of payers that may pay based on an MS-DRG; you have other payers that may pay on a per diem; some have a percentage of charge reimbursement,” Adams added. “And so, we believe that you really have to aggregate those so that it’s comparable across the board for all payers.”

What’s more, Adams added, providers that believe that the new rules apply to their acute-care hospitals, but not more specialized facilities, may be mistaken.

“It applies to critical access hospitals, inpatient psychiatric facilities, LTACHs (long-term acute-care hospitals), sole community hospitals, inpatient rehab facilities, children’s hospitals, and others,” he said. “So it’s really inclusive, (and) I think that’s an important point that can often get missed.”

The vast quantities of information that need to be collected may constitute a formidable task for any health system, Adams admitted, but he said he strongly agrees with the spirit in which the rule changes were written.

“I’ve always thought, and I’m pretty sure this is consistent with HFMA’s position, that consumers should be able to shop around in advance of a routine test or elective procedure, as they would for any other non-healthcare services,” he said. “Many hospitals, without the CMS prompting, have already implemented some patient estimation systems that they utilize in-house already that provide patient estimates.”

“This rule takes it a step further by requiring an online tool for the consumer, which quite frankly makes sense in this current day and time, where patient engagement systems are becoming more widely implemented, and consumers everywhere have become proficient on navigating the Internet on their phones, as well as their personal computers,” Adams added. “I mean, nowadays even … seniors are using personal computers, tablets, phones to search for different things, to look at different service pricing, and the like. At Panacea, we believe providers that embrace the technology … as many other industries have done for years now, will likely see opportunities to increase their market share and patient satisfaction scores, and improve on a more real-time basis their communications with their patients and community.”

For more information on how Panacea is assisting providers nationwide with preparing for all the upcoming changes, go online to https://www.panaceainc.com/cms-price-transparency