Wooster Community Hospital was prompted by its local self-pay Amish community to offer package pricing for common services and procedures. However, the hospital found that the package pricing is popular with all self-pay patients, especially those who require imaging services.
In response to requests from its patients, Wooster Community Hospital, Wooster, Ohio, offers bundled prices for dozens of common procedures and services to self-pay patients. Popular services include:
- $6,350 for vaginal delivery, including one ultrasound, prenatal care, 48-hour inpatient stay, and six weeks of postpartum care
- $1,190 for bilateral ear tubes
- $575 for an MRI without contrast
About 5.6 percent of Wooster’s patient population is self-pay, which includes members of the Amish community. Wooster always extends a 25 percent discount off its chargemaster prices to self-pay patients who pay in full within seven days of service. The package prices, which include all hospital, physician, and ancillary fees, generally include a slightly bigger discount. Payments for package prices are collected at the time of the service.
“Regardless of the exact discount, the customer usually perceives it as a better value because this eliminates the unknown,” says Scott Boyes, director of fiscal services and CFO. “When they walk out after their services are rendered, they are finished and they are not going to get a bill.”
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Logistics of Package Prices
Boyes’ staff works individually with local surgeons, obstetricians/gynecologists, radiologists, and other specialists—some of whom are employed by the hospitals—who are willing to offer package pricing. Together they decide what services could be appropriately bundled into a package.
Then they ask other physicians—for example, pathologists and anesthesiologists—to offer a discount on their services that need to be included in a bundle.
Wooster does not have a cost accounting system to help determine appropriate prices. So Boyes starts by checking what Medicare pays the hospital and physicians for a given service or procedure. “We set the price a little higher than Medicare payments because, like most hospitals, we lose money on Medicare rates,” Boyes says. “This gives us something from which to base our pricing.”
If the total sum of all physician, hospital, and ancillary fees for a given procedure is too high to be competitive, Wooster tries to negotiate with physicians for lower fees. If consensus cannot be reached between two specialty physicians, Wooster publishes two package prices for the same procedure.
“For example, if one orthopedic group is only willing to accept X dollars for a package on a total knee, but the other group is willing to go lower, it is pointless to try and keep driving to a common price for both,” Boyes says. “I just list two different package prices in what we publish. This is the package price for Doctor X and this is the package price for Doctor Y. And then I let the consumers choose.”
Physicians who participate in the package price program introduce the bundled price option to patients when they decide to have a specific procedure or service.
These steps are followed:
- The physician notifies Wooster registration staff that a patient is being scheduled for a package.
- A code is entered into the billing system to indicate that the patient encounter is a package price and, thus, no bill should be prepared for that service.
- Hospital-based ancillary providers, such as the radiologist and pathologist, automatically get demographic feeds off Wooster’s system so they know not to bill the patient.
- Wooster registration staff collect payment on the day of service and distribute the appropriate payment to each provider.
Overall, the administrative burden associated with package prices is less than that required to submit insurance claims, prepare patient statements, and collect from both patients and insurers, says Kristen Shoup, the hospital’s manager of revenue cycle. “With package prices, we do have to process checks to other parties, but it is very controllable on our end, whereas when we are dealing with an insurance company, it is consistently more challenging to get the claim paid,” she says.
Benefits to Patients and Providers
Wooster’s package price program is similar to that of several other hospitals in northeastern Ohio. Wooster posts most of its package prices on its website, but otherwise does not promote the program, which began in response to requests from members of the area’s large Amish community, all of whom are self-pay. Because members of the Amish community expect to get package prices for all services, they will call Wooster and other area providers to ask about needed services that are not listed in the price book. “If there’s some procedure that’s not listed, we will go ahead and assemble a package price,” Shoup says.
Wooster representatives meet with Amish leaders each year to provide its package prices, which are published in a book that members of the Amish community use to evaluate their options.
“They don’t like surprises, and they don’t like bills from four different providers,” Boyes says.
For that matter, neither do hospitals and physicians. Wooster and the physicians it works with are amenable to sizable discounts for the bundled services because they are paid in full at the time of service. Thus, there are no insurance claims to process, billing and collection expenses, or write-offs of uncollectible debts.
Wooster began offering package prices several years ago after learning that another area hospital was doing so. It was an easy decision, Boyes says.
“Frankly, in our area, if you’re not offering packages, you are not going to have the Amish business, because word-of-mouth is powerful in that community,” he says. “And if you are not offering packages, they perceive, rightly so, that you don’t care about their community’s business.”
The package prices are available to all patients, not just those in the Amish community, including patients with high-deductible plans who want to limit their out-of-pocket expenditures. Package prices for imaging studies are particularly popular.
“When patients need an MRI or a CT or even a PET scan, we are able to roll that together with the radiologist fee and give them a better deal,” Shoup says.
Wooster started its package price program at the request of an ear/nose/throat practice that wanted to offer competitive prices to members of the Amish community. Physician leadership is essential to making the program work, Boyes says. “Frankly, I don’t believe we would have gotten anesthesiology or pathology on board in the early days of this program if it wasn’t for one of their peers asking them to please help them provide a competitive package for the Amish community.”
The patient who pays up front wants peace of mind that the financial transaction is over. Delivering on that promise requires good communication between all providers in the package. “You don’t want to have slip ups that result in patients walking out of your hospital thinking they’ve paid everything and then a month later they get a bill because it wasn’t registered correctly,” Shoup says. “You must make sure that you have your administrative process down pat, that your communication process is effective, and that everybody involved in an encounter knows when a patient should pay a package price.”
Lola Butcher is a freelance writer and editor based in Missouri.
Interviewed for this article: Scott Boyes is director of fiscal services/CFO at Wooster Community Hospital, Wooster, Ohio, and is a member of HFMA’s Northeast Ohio Chapter.
Kristen Shoup is manager of revenue cycle, Wooster Community Hospital, Wooster, Ohio, and is a member of HFMA’s Northeast Ohio Chapter.
Publication Date: Thursday, June 05, 2014