Podcast | Price Transparency

Deconstructing the CMS price transparency rule

Sponsored by Panacea
Podcast | Price Transparency

Deconstructing the CMS price transparency rule

As the deadline for the Centers for Medicare & Medicaid Services (CMS) price transparency rule looms, reality is setting in for healthcare organizations. By January 1, 2021, hospitals and health systems must create and make public a list of standard charges for the top items and services they provide. In a recent podcast, Gregory Adams, executive vice president for Panacea Healthcare Solutions, spoke about the challenges and opportunities the new rule presents. Following is an overview of that conversation.

What does the CMS price transparency rule require?

There are essentially two broad requirements. The first is that hospitals must develop a unique list of 300 shoppable items and services, including 70 already defined by CMS. Hospitals that do not have an online patient estimation tool for these items on their website by January 1 must display a description of the item or service; the appropriate HCPCS, DRG or ICD-10 code and specific information about negotiated payer rates.

The second requirement dictates that organizations create a machine-readable file that includes the abovementioned information and make it accessible on the hospital’s website for payers, employers, vendors and other relevant parties.

What are key aspects of the final rule of which organizations should be aware?

Something organizations may miss is that the rule applies to all hospitals, not just those that participate in Medicare. This includes critical access hospitals, inpatient psychiatric facilities, long-term care organizations, inpatient rehabilitation facilities, children’s hospitals and others.

The data requirements are also more comprehensive than organizations may realize. For example, National Drug Code and applied quantity level information needs to be included as well as fee schedules and contract information for employed physicians and non-physician practitioners.

Although the rule does not require organizations to include negotiated rates with federal payers, such as Medicare and Medicaid, if a hospital has contracts with third-party payers that provide insurance to Medicare patients, such as through Medicare Advantage plans, then these negotiated rates must be included in the price transparency information.

What do you recommend hospitals do to remain on track to meet the deadline?

My biggest recommendation is to get started. At Panacea, we’re working with clients to gather data, including the last 12 months of 837 and 835 claims data, patient financial system data, payer contract information, fee schedules and chargemaster information. After loading the data into our system and testing it for accuracy, we are running a dis-aggregation algorithm that generates a unique shoppable list and produces charge payment and allowed payment profiles for all items and services. We’re also analyzing the hospital’s chargemaster prices, to ensure prices are rational and competitive within their marketplace, with a special focus on those items on the shoppable list.

What are the opportunities and responsibilities healthcare organizations have in communicating with patients about prices and financial responsibility?

The thought process behind the price transparency legislation is that consumers should be able to shop around in advance of a routine test or elective procedure as they would for any other non-healthcare service. Outside of the CMS rule, many hospitals have already implemented patient estimation systems for in-house use and to provide patients with upfront price information. However, the rule takes things a step further by requiring an online consumer tool, which makes sense in the current digital age. Nowadays, even seniors are using personal computers, tablets and phones to search for different things and compare service pricing. At Panacea, we believe providers that embrace the idea of using technology to enable greater price transparency will likely see opportunities to increase market share and patient satisfaction scores and improve communications with patients and the community.

Hear the entire podcast: hfma.org/podcasts/panacea. 

About Panacea Healthcare Solutions, Inc., a BESLER Company

Panacea helps healthcare organizations improve their coding, compliance and data integrity with front-line expertise in mid-revenue-cycle management. Designed for healthcare professionals responsible for financial performance or compliance, Panacea delivers innovative auditing, compliance, chargemaster, strategic pricing and revenue integrity consulting and software solutions. Our goal is to help clients proactively identify risks and opportunities and overcome today’s challenges, providing the clear answers needed to swiftly and cost-effectively achieve quality results. More information is available at panaceainc.com

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