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CMS price posting rule may spark confusion when prices don't match what patients have to pay

There's "no perceivable benefit" to patients as the chargemaster "rack rate" is not a reflection of what they'll end up paying, experts say.

Susan Morse, Managing Editor

Hospital revenue cycle executives and others are scratching their heads over a Centers for Medicare and Medicaid Services proposed rule requiring them to post online their prices for standard charges starting in 2019.

Health executives have a legitimate gripe in not wanting to share their chargemasters for the world and competitors to see. They are expected to share whatever concerns they have over inpatient prospective payment system rule in comments due to the Centers for Medicare and Medicaid Services by June 25.

Already, hospitals are upset by having to make the information public, said C. Timothy Gary, counsel at Dickinson Wright in Nashville and CEO Crux Strategies.  

"They'd like to keep that proprietary," Gary said. "It's so easy for their competitor to look at that and use that to their disadvantage … and it's susceptible to misinterpretation."

Another concern is that the rule won't work from the standpoint of CMS promoting price transparency. Patients will be able to see the chargemaster "rack rate" of what a service costs, but will still have no better idea of what they'll end up paying.

"As characterized in the rule, it's meaningless," Gary said. "You can put it out there, but as far as the average consumer being able to take that information and translate into what their bill would like like, it's highly improbable."

The requirements included in the IPPS proposed rule will help hospitals provide this information in a more useful manner to patients, said American Hospital Association President and CEO Rick Pollack shortly after the proposed rule was released in April. 

"We plan to submit additional ideas related to price transparency to CMS in response to the RFI (request for information), including ways to help patients identify their out-of-pocket costs," Pollack said. 

Charges are complex and have more to do with the diagnostic related group or DRGs from inpatient stays than the retail price.

In surgery for example, a lot of procedures are performed and it all gets itemized from the chargemaster. Once that goes into the revenue integrity department, it's bundled or unbundled and coded by DRG.  It's not necessarily a line by line item, said Deborah Vancleave, vice president of Revenue Cycle of Mosaic Life Care, a physician-owned, 350-bed rural facility in Missouri.

A patient coming in for an appendectomy may look at the price for the procedure, but there are other charges having to do with anesthesia or the pathology test, she said.

"For patients, it's insufficient transparency," Vancleave said.

Mosaic uses an online cost estimator tool purchased by Simplee that Vancleave said allows patients to get an estimate of their out-of-pocket costs. Vancleave hopes the tool will suffice for the 2019 transparency rule. Through an online patient portal the patient can put in his or her insurance information and pull back a result from the payer of the anticipated cost. 

Mosaic has no issues with surprise billing from out-of-network physicians because all of its physicians are employees, according to Vancleave. It may not be as easy for hospitals that don't employ all of their physicians. 

A single procedure may turn into other codified charges, agreed 

Gerilynn Sevenikar, vice president of Revenue Cycle of Sharp Healthcare in California.

Consumers will be confused by the rule, she said.

"I think the terms cost, price, charge, and patient responsibility are all so different depending on the context and used interchangeably … which is why it is so confusing," Sevenikar said. "I think that the average consumer does not understand that from a regulatory perspective, hospitals are required to detail everything to the highest degree of specificity we can so the clinical content of the care can be 'codified.'"  

This means that, for the most part, that single procedure you are coming into the hospital for will result in several, sometimes hundreds of lines, of "codified" charges," she said. 

What a patient pays for services is just as much a reflection of his or her health insurance coverage as it is the result of chargemaster pricing.

"Depending on how each individual payer pays – the charge may have no bearing on reimbursement or patient responsibility," Sevenikar said. "So, knowing the charge could mean nothing to a consumer when their responsibility is part of a rate for a specific code." 

Many states such as California and Colorado already have rules requiring price posting.

While Sharp already posts its charges on its website, inquiries into pricing are infrequent, Seveniker said.

"What most patients want to know is specific to their own care and their own coverage," she said. 

Gary said he sees the rule provoking hospitals to submit comments along the lines of, "'What are you doing?' It's going to create confusion and there's no perceivable benefit to it. I think that's the comment they're likely to get."

Twitter: @SusanJMorse
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