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Hospital price transparency: What CEOs need to know now

Sep 30, 2021

Hospital price transparency is back in the news, and one figure is getting a lot of attention: $2 million.

Just earlier this month, the Centers for Medicare & Medicaid Services proposed raising the $300-per-day penalty up to a maximum of $5,500 per day for hospitals with more than 30 beds, which could add up to more than $2 million per year. The penalty would rise by $10 per day for each additional bed up to $5,500 per day. The $300-per-day rate would remain for hospitals with 30 or fewer beds.

News of the penalty hike proposal has received mixed reactions, including from the American Hospital Association (AHA), which said it was “deeply concerned” about the announcement.

Even though the mandate went into effect earlier this year, many hospitals had been testing options and trying to find the right technology. In some situations, hospitals discovered their solution did not meet the compliance standards. With the news that steeper penalties could be enacted, many more hospitals will be looking to fast-track a correct solution to help ensure compliance.

Here are common mistakes to avoid and best practices to follow to ensure that your hospital is as compliant as possible with these complex requirements.

1. Ensure the correct files types are on your hospital website

To comply with the price transparency mandate, your hospital must publish two files on your website.

The first is a machine-readable or an “all services” dataset. This file must:

  • Include the hospital’s chargemaster, which is a list of the hospital’s procedures, services and products.
  • Be available, machine readable and downloadable from the hospital website.
  • Contain gross charges, negotiated specific reimbursement rates by payor, a self-pay “walk-in rate” and a minimum and maximum negotiated reimbursement rate covering all services and all payors.

Note: these requirements apply to hospitals (other than federally-owned hospitals), as well as hospital-based physician practices within a health system.

The second is a shoppable services file (or price estimator). This file must be:

  • Publicly-available on your hospital’s website.
  • Searchable in a consumer-friendly format.

This tool gives patients the option to “shop around” if they are pricing an MRI, for example.

There must be at least 300 items listed on the shoppable services file, of which 70 services are required, if they are offered by the hospital. If some of the 70 are not offered, the hospital website must provide notice that they are not and the reason why, which could be a lack of volume or data. Shoppable services include procedures that are planned and scheduled, so the mandate does not affect services that are emergent. Hospitals have flexibility in determining the 300 items to list, based on the parameters as outlined above. 

Hospitals may provide a price estimator tool on their websites in lieu of the shoppable services file. It must meet certain requirements (available to everyone, not just patients, without a required login, provides out-of-pocket estimates for patients, etc.).

2. Do not use PDFs

As can be seen in the two file types above, the CMS mandate is very specific. By identifying what your hospital’s website should use, you should also be aware of what to avoid, and that includes PDF files. PDFs are not allowed in the all services dataset.

3. User-friendly navigation is a must, or fines could follow

Your hospital should strive to make the price transparency tools as easy to find as possible on your hospital’s website. These tools should not be “hidden” behind numerous tabs. Data should also be easily downloadable. Be advised that any visitor to your hospital website can file a complaint with CMS if they have difficulty finding the price transparency information. CMS has a complaint form on its site for users to fill out if they have trouble shopping for prices.

Have your employees test how quickly they can locate the information — if there are problems, consider making changes to your website layout.

4. Closely watch line-item versus bundled charges

A common mistake that needs to be avoided is incorrectly using price comparisons. Within your data, it’s key to segregate bundled payments from charged line item payments. For example, if a chargemaster lists a hospital room rate of $1,000 per day, this will not include any labs, drugs, X-rays or other services, which will all be priced at different rates. While chargemaster prices are detailed by service, most hospitals are reimbursed for inpatient services based on a bundled rate such as a DRG rate or a per diem rate. The data file should be clear about which services are and are not included in the bundled rate by payor, along with an apples-to-apples comparison of rates for various services provided.

This includes specifying various rates, which may include:  

  • Per diem rate
  • A case rate
  • DRG-based rate

5. Missing a chance to refresh outdated information

During your data-gathering phase, it’s a mistake to focus exclusively on getting your price transparency tools online. As you assemble information during this process, it can be a good time to uncover outdated data.

You can instruct your teams to look for old/outdated forms, files or information in your hospital’s systems. There may be older contracts that need updated, and reviewing your data could trigger outreach to payors, which could lead to updated reimbursement for your hospital.

Best practices you can start right now

Implementing a price transparency solution is about more than avoiding mistakes. It’s also about following best practices that can lead to improvements.

Information presented for price transparency can be used internally to compare payor contract rates and contract structures (reimbursement structure).

  • Compare your own internal agreements. How are different payors reimbursing for the same services? How can this be used in future contract negotiations?
  • Use published reimbursement data from other organizations to compare your agreements to neighboring facilities.
  • Review market reimbursement to see which reimbursement structures are on the horizon (e.g., DRG, OPPS, per diems, etc.).
  • Use published data to compare cash discount/self-pay reimbursement rates in your area.
  • Develop a market strategy around key price sensitive services you provide and make those services price competitive using published data.

For more information on how to meet compliance mandates, the CMS has issued a 10-step guide to help hospitals. The next step is to talk to experts in this field to help you set up a system that is correct from the start. That’s where Wipfli can come in and support your hospital.

How Wipfli can help

Wipfli has a comprehensive hospital price transparency solution to handle CMS requirements. Our specialists can build the files for you and add them to your website. For the shoppable services tool, we will house that on our server, but it will be formatted so it looks like it belongs on your website. With minimal effort required from your teams, you will get a solution added to your website and ready to align with CMS guidelines.   

Also, if you are partnered with another vendor, we can conduct a review and offer feedback and opportunities for improvement.

Contact Wipfli for more information on how we can set up your hospital price transparency tools or to schedule a demo of Wipfli’s price transparency solution. Our team will guide you through a step-by-step process to provide greater transparency while helping you avoid fines and penalties from noncompliance.

Author(s)

Nicholas E. Smith
Principal
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