Price Transparency Data is being used to Form Impressions of your Hospital. Are They Right?

JAMA Network Open recently published a study comparing the pricing of physician-owned hospitals (“POH’s”) to non-POH’s[1].

It is already getting some press among other publications, such as Modern Healthcare[2].

Regardless of historical trends, it demonstrates that price transparency data is being used for more than just patients shopping for services. It is being used to shape opinions on how hospitals should be regulated.

Price Transparency Data is Now Being Studied.

We are starting to see the data that hospitals publish to comply with the CMS price transparency rules being studied and used by companies and researchers. For one example, Turquoise Health is turning into a business[3].

Expect to see your hospital’s pricing data in many reports in the coming years. Because of this, there are some important considerations in reviewing your chargemaster.

Shoppable Services are Important.

It is new for many hospitals to consider shoppable services when implementing a pricing strategy. After all, the term is fairly new. The shoppable services list is defined by CMS and includes higher volume services that can be scheduled in advance. Negotiated pricing and cash pricing must be disclosed for all the services on the CMS list that the hospital provides.

Hospitals should review the amount they are showing as the cash price for shoppable services.

Because of its ease of administration, many hospitals are using a set percentage reduction from their standard price for their cash price. However, this can create some unusual comparisons, depending on the hospital’s standard price.

As a hypothetical example, consider a hospital that had the median non-POH charges, as presented in the JAMA study referred to above, a table is presented that contains the cash price for CT of abdomen and pelvis. The median non-POH cash price was $2,531, while the median commercial negotiated price was $1,580. So, our hypothetical hospital has a cash price $951 higher than the average commercial price.

There could be an opportunity to look at pricing that would draw more cash-paying patients, while receiving payment at the average commercial rate. But regardless of the financial impact, trying to explain to someone why cash patients are required to pay so much more could be difficult.

Published Pricing Doesn’t Necessarily Mean Active Pricing.

Part of the price transparency rule is that hospitals must publish their chargemaster annually. Outside organizations use these prices in comparison to other providers.

However, many hospitals have charges in their chargemaster that are unused, or inconsistent between areas of the hospital.

We have also seen hospitals publish a price for “Miscellaneous” or non-chargeable patient convenience items.

Conclusion

While a comprehensive review of your chargemaster has always been important for compliance and revenue management reasons, it is increasingly important to consider the conclusions that outside organizations are going to make when they look at your pricing data.

References - 

[1] https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2806510 

[2] https://www.modernhealthcare.com/providers/physician-owned-hospitals-prices-study-jama

[3] https://turquoise.health