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Creating hospital price transparency is easier said than done

Transparency mandates make it tricky for health systems, as a procedure’s cost and what patients pay is very different.

Transparency mandates make it tricky for health systems, as a procedure’s cost and what patients pay is very different.Transparency mandates make it tricky for health systems, as a procedure’s cost and what patients pay is very different.

Mark Jones – chief financial officer at the nonprofit Hill Country Memorial hospital in Fredericksburg, Texas – knows how hard it can be to navigate the maze surrounding price transparency.

“Patients don’t want to know the invoice amount. They want to know how much they will actually pay,” he said. Such requests are especially difficult given how fragmented healthcare system has become; yet Hill Country has seen spikes in the number of people who request price estimates.

“We provide estimates only, since we can’t predict changes that may arise during a procedure,” Jones said.

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[Also: AHA unveils transparency toolkit]

With more patients paying for healthcare out of pocket, the need for transparent pricing becomes paramount to managing delivery costs. A 2014 study by New York-based healthcare consulting firm, Mercer, found high deductible, consumer-directed health plans jumped from 18 percent to 23 percent of all covered employees.

On top of that, the Affordable Care Act requires hospitals to make public all items and services under Section 2718 of the Public Health Services Act. But what patients pay and hospitals charge differ.

“In an ideal world, a hospital charge description master would reflect costs for services and function as information to consumers. Unfortunately, hospital charges are often not associated with actual cost due to the intricacies of the reimbursement structures,” said Tawnya Bosko, senior manager at The Camden Group, a healthcare consulting firm in Los Angeles.

Rick Gundling, vice president at the Healthcare Financial Management Association, said CDMs are a starting point to price discussion, one “developed at a time when consumers paid very little out of pocket for their healthcare and most price discussions were between hospitals and insurers or government programs, like Medicare or Medicaid. Price information that does not take the specifics of individual health insurance coverage into account will not reflect the actual amount consumers pay out of pocket.”

[Also: Guroo, healthcare price site, launches]

Jones said a hospital could expect to collect between $100 and $750 for a procedure listed at $1,000, depending on whether the patient is insured, uninsured, in- or out- of network.

“Change all that for other plans offered by Blue Cross, Aetna, Humana and for Medicare and Medicaid. Then, do the same thing for primary care physicians, surgeons and other specialists. The varying amounts patients pay for the same procedure make transparency a challenge,” he said.

Bundled payments – which combine all services into a single care episode – make it easier for consumers to get price information, by reducing the number of parties consumers need to contact for estimates, said Gundling. He warns that patients unable to get price estimates may rely on third-party websites that can’t provide individualized information.

“Financial officers can mitigate the risk of consumers making decisions based on inaccurate information by making it easier for them to get price information,” he said.

Cost isn’t everything, said Bosko.

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“Value in healthcare should be measured by price and quality. For example, a consumer may be willing to pay a higher price for a hip replacement if they know the quality is higher. Right now, there isn’t a streamlined way to attain the necessary information to make this type of decision.”

Jones said the solution is to foster collaboration between facilities, providers and insurance companies.

“ACA attempts to move the industry in that direction, but we have a long way to go. Only when we arrive, can all factors be considered and true price,” he said.

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