On January 1, the day the Centers for Medicare and Medicaid Services mandated hospitals to post their prices for standard charges online, St. Luke's University Health Network in Pennsylvania was ready.
St. Luke's complied, as other hospitals did, by adding its chargemaster prices to the websites of its ten campuses. But unlike many other hospitals, which said the chargemaster was not an accurate predictor of what a patient would pay, St. Luke's already had such a pricing tool online.
Starting in October 2015, St. Luke's began offering a PriceLock Price and a Post-Insurance Price to patients, available as buttoned tabs.
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The PriceLock Price is a bundled, all-inclusive amount that includes physician fees, said Senior Vice President of Finance Francine Botek. It offers patients a locked-in price for many outpatient services such as testing, imaging, lab services and common surgical procedures - rotator cuff repair, for example. The list is expected to be expanded.
The caveat for patients is that they pay up-front for the services, after calculating what their insurance company will reimburse. For instance, if the out-of-pocket price for an MRI is $1,000 after insurance, the patient pays his or her share before the procedure.
However, what they pay is a discounted amount, based on the bundled price. So out of that $1,000 a patient would normally owe in out-of-pocket costs, he or she may end up paying only $500.
St. Luke's loses that additional $500 in revenue, but it's worth it to revenue cycle operations to get the immediate payment, according to Botek.
Having patients pay upfront has obvious advantages for health systems.
Even if the payments are a lower amount than what would have been collected after the procedure, there's no phone calls, letters or other efforts to collect on the bill.
"To discount, we're bypassing collection efforts," Botek said. "For us, it's the benefit of getting that payment up-front from the patient. We're not chasing the patient for a payment. We're ensuring we're getting something."
This has become more important as patients take on more of the financial burden for their healthcare through high out-of-pocket deductibles and expenses.
"With some of these out-of-pockets, patients can almost not afford their care," Botek said.
HOW IT WORKS
St. Luke's submits the claims to the insurance company, which is working on a contracted rate.
Patients who pay up-front never pay more than the amount given by the PriceLock tool.
Patients who don't want to pay upfront can still get an estimate of their portion of the bill through the second Post-Insurance Price tab.
They can also toggle back and forth to see the price comparisons of the discounted up-front payment to what they would be billed later.
St. Luke's developed the price lock bundled pricing. Other online logistics were done through vendor Simplee's software platform.
Since January 1 when CMS's pricing transparency mandate went into effect, St. Luke's has gotten numerous calls from other providers, Botek said. It's also piqued patient curiosity.
Despite the interest, Botek said she believes St. Luke's pricing tool is a rarity among health systems.
It remains difficult to shop around for care, she said. St. Luke's staff tried, in a market survey of various providers in the region, with little success.
"It was just nearly impossible," Botek said, to get answers on exact prices. "We've taken out the guesswork. We feel very strongly people need transparency."
The ROI is there, Botek said, but even though the number of patients taking advantage of a lower price by paying upfront has doubled, there's still too few to gauge a figure.
St. Luke's is a company of $2 billion net revenue that provides an estimated two million outpatient services a year. Its St. Luke's University Hospital Bethlehem is less than two hours from New York City and a little over an hour to Philadelphia.
Since January 2016, 3,637 patients have used the price lock feature, Botek said. This is about 200 patients a month.
"Our numbers for patients that are using the price lock feature have been doubling," she said. "We do two million outpatient visits a year (and have) just north of 2,000 price lock patients. It hasn't made a significant impact. But patients just rave about it."
Price transparency is only the beginning of CMS mandates, Botek said.
CMS Administrator Seema Verma indicated earlier this month during HIMSS19 that more will be coming. The agency wants to make the rule actionable to create comparison shopping and competition.
"I think we have to start somewhere as an industry," Botek said. "The message they're sending to health systems, we as an industry have to help patients understand what their liability is. There is no doubt in my mind this will grow as a requirement."
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