Price Transparency White Paper From PARA HealthCare Analytics and HFRI

CMS PRICE TRANSPARENCY MANDATE IMMINENT

4 CRITICAL TASKS FOR ACHIEVING COMPLIANCE With the government-mandated deadline for implementing healthcare pricing tools fast approaching, hospitals and health systems need to move quickly to ensure compliance with the spirit and letter of this landmark regulation.

It is still possible that ongoing or last-minute legal challenges will derail or delay the Centers for Medicare and Medicaid Services (CMS) January 2021 requirement for publishing online inpatient and outpatient procedure pricing.

But given the ever-increasing political and regulatory pressure surrounding healthcare costs and the growing demands of price-conscious consumers, it seems probable that it’s only a matter of when, not if, hospitals will be required to address the pricing transparency challenge.

As a result, organizations cannot afford to delay or ignore the issue in the hope that it will somehow go away. Those providers that take steps today to calculate appropriate and competitive prices and then develop the tools to make that information readily available via the Internet will have a significant competitive advantage over those that do not. Equally important, they will mitigate the potentially severe financial risks of non-compliance.

PROPOSED LEGISLATION BACKSTOPS RULE CMS’ price transparency final rule was published in December 2019 pursuant to a presidential executive order released the previous June that called for transparency as a means of encouraging provider competition and reducing costs. The American Hospital Association (AHA) immediately filed suit to block the rule’s implementation; a federal judge upheld the legality of the regulation in June 2020.

The AHA subsequently appealed, and on October 15, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit heard arguments against the rule. According to news reports, the judges expressed skepticism about AHA’s contention that the Department of Health and Human Services (HHS) didn’t have legal authority under the Affordable Care Act to implement the rule.1 The judges also questioned AHA’s assertion that hospitals would have difficulty producing the required rates due in part to the complex algorithms often used in price setting. Finally, the judges appeared to take issue with the challenge that the rule creates a major burden for hospitals to comply.

Judge David Tatel noted the government extended the compliance deadline by one year and increased the rule’s estimated cost. “Many new regulations require substantial initial investment by regulated parties,” he said.

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On a separate front, legislation that would codify into law the rule’s transparency requirements—known as the Health Care PRICE Transparency Act—was introduced in Congress shortly after the judicial ruling. It is therefore likely that the requirements of the CMS rule ultimately will be made permanent and binding even if the AHA prevails in its appellate challenge.

As it currently stands, failure to comply with the rule, now scheduled to take effect on Jan. 1, 2021, could result in civil monetary penalties of up to $300 per day. Hospitals could also be subject to audits and corrective action plans if they fail to disclose negotiated rates.2 Additionally, failing to meet the requirement would effectively leave a hospital’s Medicare cost reporting incomplete, and that could result in all Medicare reimbursement being withheld.

Providers must therefore make plans to address the following four tasks to meet the regulatory mandates:

Step 1. Price Optimization Collecting, organizing, and posting enterprise-wide pricing data in the multiple configurations required by CMS represents a significant challenge in its own right, particularly for hard-pressed hospital IT departments. But before that can happen, it is essential that organizations be fully confident in the prices they’re preparing to share publicly. They must be absolutely certain that their prices make economic sense and are justifiable and competitive when compared to peer pricing.

To accomplish this, hospitals need to create rational pricing models assembled around cost, reimbursement, and peer pricing data. The process should begin with a review of existing pricing information across all hospital revenue streams, including room rates, emergency visits, diagnostic and therapeutic procedures, operating room, anesthesia, PACU, pharmacy and medical supplies. Careful comparisons should then be made to peer pricing using publicly available data sources.

For more information on how to develop competitive peer pricing, read “All Eyes on Pricing Transparency.”

Step 2. CMS Requirement 1 Compliance Once appropriate pricing has been developed, providers should next turn their attention to complying with the letter of the CMS regulation. The rule contains two specific price transparency requirements. First, hospitals must post their entire array of standard charges (essentially their chargemaster) online in a machine-readable file that is easily accessible from their public website. For each line item, the following price points must be included: • Gross Charges (chargemaster price) • Discounted Cash Prices (self-pay/cash price) • Payer-Specific Negotiated Charges (hospital negotiated price by third-party payer) • De-identified Minimum Negotiated Charges (lowest third-party payer negotiated price) • De-identified Maximum Negotiated Charges (highest third-party payer negotiated price)

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Because the pricing information optimally should be presented for all patient types, including inpatient, outpatient, emergency, urgent care, professional fee and observation, the file can encompass more than two million data points.

View an example of the CMS required machine-readable document below.

CLICK HERE

Step 3. CMS Requirement 2 Compliance The rule’s second stipulation requires that hospitals also publish a document listing pricing for 300 specific shoppable healthcare services. Of these 300 items, 70 have been pre-defined by CMS, while the remaining 230 can be selected at the discretion of the hospital. The required and optional services include both inpatient and outpatient care.

For each of the shoppable services, the price categories illuminated in the standard charges document must be listed, e.g. gross charges, payer-specific negotiated rates, self-pay, and de-identified minimum and maximum negotiated charges.

The file also must contain any ancillary charges that are customarily included for the specific shoppable service or service package. These may include the costs of additional procedures, tasks, allied services, supplies or drugs. Finally, the rule requires that consumers be advised of any professional fees billed separately from the facility bill.

For an example of a shoppable service package, click here.

CLICK HERE

For more detail on the CMS requirements 1 and 2, watch our Becker’s Webinar: Price transparency – clarifying the unknown.

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Step 4. The Patient Interface With valid pricing information in place, healthcare organizations should then implement an Internet-based price estimator tool that can present information in a way that allows consumers to easily access accurate estimates for specific services. This solution needs to incorporate patients’ co-pay and deductible coverage data to ensure an appropriate out-of-pocket estimate.

“PARA helped us develop the pricing strategy and meet CMS Requirements 1 and 2, as well as implement the customer-facing interface on our website. You guys do most of the work for me and I love it!”

Virginia Torres Patient Accounting Manager El Centro Regional Medical Center, El Centro, CA

CLICK HERE

AN END-TO-END SOLUTION Unlike other companies, PARA HealthCare Analytics (PARA), a Healthcare Financial Resources company, has developed a comprehensive solution that helps hospitals rapidly execute all four steps necessary to comply with the transparency rule.

Pricing Model Development: This important step includes the creation of a rational and defensible pricing model developed through service line and procedure price comparisons against a designated group of peer institutions.

As part of this process, PARA subject matter pricing experts will work alongside your financial management team to establish specific pricing targets and timelines based on the opportunities presented. Price-setting considers not only peer pricing levels, but also contractual reimbursement rates to ensure all new pricing is consistent with payer policies.

CMS Pricing Regulations 1 and 2: PARA is the only vendor that can provide both CMS requirements in a fully customizable manner.

We support our clients with the datamining and managed care contract analysis needed to complete the machine-readable document for CMS requirement 1.

PARA can take data in virtually any format to complete this requirement, typically within 30 days.

For CMS requirement 2, we again provide the assistance required to determine the required shoppable services, payer-specific rates, and ancillary services in a customized format to accommodate the hospital’s current website styles.

Price Estimator Tool: Finally, PARA can implement a patient-facing estimator that provides the ease-of-use and functionality required to deliver customerfriendly, procedure-level estimates for specific patients, regardless of their coverage.

The PARA Price Estimator offers a customized web-based estimator that meets the following requirements: 1. Provides estimates for the hospital’s 300 most shoppable services including the 70 CMS required services 2. Delivers at the time of tool use, a financial obligation estimate of the customer’s requested shoppable service

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3. Prominently displays the tool on your hospital’s website with customer accessibility without the need to establish a user account or password, and without charge.

This estimator allows a more custom quote for shoppable services based on your customer’s actual insurance benefits and deductibles which will provide more meaningful information to your potential customer.

The PARA Pricing Transparency meets all three CMS requirements with every element of the solution customizable. It is a cost-effective, easy to implement web-based solution that also has the ability to track how customers interact with the tool.

To see how this solution would work for your hospital, click here to view a short demo.

Meeting the price transparency requirement by January 1 will help you mitigate potential non-compliance penalties, strengthen patient satisfaction, and improve your competitive edge.

But time is of the essence, so don’t delay. Contact PARA today to learn how we can help you achieve these critical objectives.

1

Robert King, Appeals court skeptical of AHA in lawsuit of HHS price transparency rule, Fierce Healthcare, Oct. 15, 2020

2

Jacqueline LaPointe, “Proposed Hospital Price Transparency Rule Faces Industry Criticism,” RevCycle Intelligence, Aug. 5, 2019

PARA HealthCare Analytics, an HFRI Company, provides pricing, reimbursement, coding and contract management services. In addition, by harnessing intelligent automation, HFRI helps hospitals and health systems accelerate cash flow and improve operating margins by resolving insurance claims quickly and effectively.

2500 Westfield Dr. Suite 2-300 Elgin, IL 60124 www.para-hcfs.com 800.999.3332

www.hfri.net 888.971.9309

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