May 2, 2007
The goal of price transparency seems simple: provide patients with real-time estimates of their out-of-pocket expenses for recommended medical procedures. While executing this goal is relentlessly complex, an HFMA report sponsored by McKesson Corporation explains that it is well worth the effort because of the opportunity estimates provide to support the patient financial services dialogue.
"Being able to give your patients estimates of their financial obligations should lead directly to the next step—having a conversation about how they will pay or otherwise resolve their obligations," notes Terry Rappuhn, project leader of the PATIENT FRIENDLY BILLING® project, a collaborative endeavor to improve patient financial communications spearheaded by HFMA. "You should be able to offer options to your patients such as paying before or at the time of service, agreeing to a payment plan, or applying for Medicaid coverage or financial assistance. This becomes a win-win scenario for you and your patients," she says.
The Means of Price Transparency
Providing patients with an advanced estimate of their expected financial obligation requires a fundamental understanding of both provider data and patient data involved.
Provider data
The most fundamental provider data in the price transparency equation consist of a clear identification of the required procedure and all of the knowable components. Physicians, medications, patient co-morbidities, case management, and rehabilitation must each be considered separately and together in the scores of possible permutations that may become necessary while the patient is at the hospital. Once those data are detailed, they must be compared against historical examples of how the hospital typically codes and charges for each component of the episode of care. Parsing out the similarities and differences should provide a reasonable starting point for constructing a unique price package, but only a starting point.
Patient data
Patient-specific data collection begins with a determination of whether the patient has health insurance. If a patient is uninsured or underinsured, this provides an opportunity to counsel the patient on available financial aid. Basic income information should be collected to determine qualification for Medicaid or charity care. If a patient has insurance, then the next step is to determine the insurance benefit for the proposed care episode. Minimally, this requires a consideration of intertwining variables: the patient's deductible, year-to-date payment against the deductible, annual out-of-pocket maximum, year-to-date payment against the out-of-pocket maximum, the contracted rate for the specific procedures (this rate will vary depending on whether the hospital is an in-network provider), whether the patient is precertified for the proposed procedure and any or all of the associated services, and whether the patient is required to sign a Medicare advance beneficiary notice.
Emerging Technologies, Emerging Solutions
Hospitals that are willing to acknowledge the complexity of the challenge and explore new ways of doing business can find a broad spectrum of evolving technology designed to bring price transparency within their reach. Combination databases with algorithms embedded in the software, consumer-friendly web applications with direct links to insurance carrier web sites, and well-trained customer service call centers can successfully retrofit existing systems for success in the new marketplace. Although web-based systems are the best way for hospitals to consolidate and calculate myriad pieces of data into a meaningful whole, they're not the only way. All providers have historical databases of charge codes and access to internal IT systems that allow them to bill for services, which means that even in a non-web-based system the essential pieces are in place; they're just not all in the same place.
Getting Started
The move toward price transparency begins with a philosophical shift in the provider-patient relationship. Providers need to get comfortable with a higher degree of patient inquiry about the specific costs associated with specific services. "Start with prices that are logical and that you can explain," advises Rappuhn. "You can start small, with one type of service such as imaging, or with those patients who proactively contact you to ask for pricing information. As you learn from your initial efforts, you can expand to other areas."
Diane Watkins, corporate director of patient financial services at Saint Luke's Health system in Kansas City, Mo., emphasizes the importance of an interdisciplinary approach to developing and managing price transparency protocols. "Individuals from patient financial services, health information management, managed care contracting, and IT must all work together to understand exactly how the technology solution supports meaningful pricing," she says.
SOURCE: The Opportunity of Price Transparency, HFMA Resource Library
Additional Resources:
hfm articles (On-line access available to HFMA members only). Not a member? Join now!
Education:
If you have questions or comments about "HFMA Wants You to Know," contact editor Maxine Harrison.
HFMA Wants You to Know ISSN: 1540-0697. Volume VI, Issue 9. Copyright 2007, Healthcare Financial Management Association. All rights reserved.